If you have ever raised a complaint against your broker or a listed company and felt like it disappeared into a black hole, you are not alone. Thousands of retail investors go through SEBI's grievance system every month, and while the process has improved over the years, it still has gaps that frustrate ordinary investors. That is exactly what SEBI is now trying to fix.

On July 23, 2026, SEBI released a consultation paper proposing a fairly significant overhaul of the Online Dispute Resolution (ODR) framework for the securities market. This is not a final rule yet, it is open for public comments till August 13, 2026, but the direction is clear enough that every retail investor should understand what is being proposed and why.

Why SEBI Is Rewriting the Rulebook on Investor Disputes

Retail participation in Indian markets has grown massively over the last few years. More people are trading options, applying to IPOs, and investing through mutual funds and AIFs than ever before. With more participation comes more disputes, disagreements over brokerage charges, delayed settlements, unauthorised trades, and disputes with listed companies. As retail interest in new offerings like the NSE IPO and other 2026 listings keeps growing, the number of touchpoints where something can go wrong grows with it.

SEBI's current system was already technology driven, but the regulator felt the process took too long and did not always end with a decision that stuck. Investors would win a case only to see it get delayed further during appeals. So this time, SEBI is not just tweaking timelines, it is proposing to change who actually runs the process.

How the Current SCORES and ODR System Works

Right now, if you have a grievance, you first raise it directly with the market participant, whether that is your broker, a depository participant, or a listed company. If that does not resolve things, you move to SEBI's SCORES 2.0 platform. Under this system, the entity gets 21 days to submit an Action Taken Report. If you are not satisfied, you get a first-level review within 15 days, and if needed, a second-level review by SEBI itself, again within 15 days. Only after all this can you approach the Online Dispute Resolution mechanism for conciliation and arbitration.

This layered approach sounds thorough, and it has actually worked reasonably well on paper. SEBI's own data shows the system handling thousands of complaints every month. In December 2024, the regulator resolved 5,636 complaints out of 11,019 total applications on file. By March 2025, that number had come down to 4,371 resolved complaints, and by May 2025, it stood at 4,493. The chart below shows how complaint volumes and resolutions have moved over these months.

The numbers show the system chipping away at complaints steadily, but the process of getting there, especially for complaints that need to go all the way to conciliation or arbitration, has been slower than investors would like. This is the gap SEBI's new proposal tries to close.

What Exactly Has SEBI Proposed

The consultation paper covers several changes, and it is worth going through them one by one because each affects retail investors differently.

• Shift in administration: Instead of independent ODR institutions running the dispute resolution process, Market Infrastructure Institutions such as the BSE, NSE, and depositories will take over. SEBI's reasoning is that these institutions already have closer regulatory oversight over brokers and listed entities, so they are better placed to enforce outcomes.
• New arbitrator selection process: Both the investor and the entity will submit their preferences from a panel of arbitrators or conciliators, and the MII will make the final appointment based on these preferences, rather than assigning one arbitrarily.
• Faster escalation from SCORES to ODR: If a complaint stays unresolved on SCORES, it will be referred directly to the conciliation stage under ODR after a review, cutting the overall timeline by roughly 21 days.
• Flexibility for AIF investors: Investors in Alternative Investment Funds will get the option to resolve disputes through mechanisms already agreed upon in their fund contracts, instead of being forced onto the ODR platform.
• Equal legal protection across AIF structures: Protections currently available mainly to AIF investors under a trust structure will now extend to those investing through companies or LLPs as well.

These changes come at a time when SEBI has also been active on other fronts affecting retail investors, including its revised ETF trading framework and the return of open-market buybacks, discussed in our piece on SEBI's open market buyback rules for 2026. Taken together, these reforms suggest the regulator is trying to tighten up investor protection across the board, not just in dispute resolution.

Current Process vs Proposed Reforms at a Glance

Aspect	Present System	SEBI's Proposed Change
Who administers ODR	Independent ODR institutions	Stock exchanges, depositories and clearing corporations (MIIs)
Arbitrator or conciliator selection	Largely assigned by the ODR institution	Both parties submit preferences, MII appoints accordingly
Unresolved SCORES complaints	Investor must separately initiate ODR	Escalated directly to conciliation, saving about 21 days
AIF investor disputes	Mandatory use of the ODR platform	Option to use pre-agreed contractual mechanism instead
Legal protection for AIF investors	Stronger for trust-structured AIFs	Extended equally to company and LLP-structured AIFs
Appeal against an investor-favourable award	No specific deposit requirement highlighted	Entity challenging the award must deposit the full amount with the MII
Current status	Not applicable	Consultation paper, comments open till August 13, 2026

Why Handing Control to Exchanges and Depositories Actually Matters

On the face of it, moving administration to MIIs might sound like a technical change that does not concern individual investors much. But think about it practically. Stock exchanges and depositories already have direct regulatory relationships with brokers and listed companies. They know which entities are repeat offenders, they hold data on trading patterns, and they have the leverage to enforce compliance because these entities need exchange membership to operate. An independent ODR institution, by comparison, has none of that direct oversight power.

This is a meaningful shift for anyone who has ever felt like winning a dispute on paper did not actually translate into getting their money back or their issue fixed. It is a problem that ties closely into a broader theme we have covered before, why a large number of retail participants end up on the losing side of trades and disputes simply because the system was not built with enough teeth. If you want the fuller picture on investor vulnerability in Indian markets, our article on why 90 percent of traders lose money is worth a read alongside this one.

Faster Resolution: What the Numbers Could Look Like

SEBI's own estimate is that the proposed changes could shave off around 21 days from the overall dispute resolution timeline. To put that in context, under the present multi-stage process, an investor whose complaint goes unresolved at the entity level, through the first review, and then the second review, could be looking at close to 51 days before the matter even reaches the conciliation stage under ODR. Shave off 21 days from that, and you are looking at roughly 30 days, nearly a 40 percent reduction.

This is an illustrative estimate based on SEBI's stated process windows rather than an official figure the regulator has published as a single number, but it gives you a sense of scale. For someone with money stuck in a dispute, whether it involves a few thousand rupees or amounts running into several lakh rupees, cutting three weeks off the wait is a real difference.

Good News for AIF Investors Too

If you invest in Alternative Investment Funds, two changes are directly relevant to you. First, you will no longer be forced onto the ODR platform if your fund agreement already has a dispute resolution clause you are comfortable with, you can choose to use that instead. Second, and this is the more important one, if you invested through a company or LLP structure rather than a trust, you will now get the same legal protections that trust-structured AIF investors already enjoy. Until now, that gap in protection depended purely on how the fund was legally structured, which had nothing to do with the investor's actual risk or contribution.

A New Safety Net During Appeals

One of the more investor-friendly proposals is around what happens when an entity, say a broker or listed company, loses an arbitration case and decides to challenge the award in court. Under the new proposal, that entity would need to deposit the full award amount with the MII before pursuing the appeal. This matters because, in the past, a losing party could drag out an appeal for months or years while the investor's money remained tied up with no guarantee of ever receiving it. Requiring an upfront deposit changes the incentive structure considerably.

What Should Retail Investors Actually Do Right Now

Since this is still a consultation paper, nothing changes immediately for anyone with an ongoing complaint. The existing SCORES and ODR process continues to apply as is. That said, there are a few sensible things to keep in mind. Keep all your transaction records, contract notes, and correspondence with your broker or fund organised, because a well-documented complaint moves faster regardless of which process handles it. If you are already dealing with a dispute, do not wait passively, use the existing first-level and second-level review windows actively rather than letting timelines lapse.

It is also worth remembering that dispute resolution is a last resort, not a substitute for careful decision making in the first place. Good position sizing and risk management, like the kind discussed in our piece on the 3-5-7 rule for protecting your trading capital, reduces how often you end up needing SEBI's grievance machinery at all. And since 2026 has already brought several regulatory shifts that affect how retail investors operate, from buyback norms to the financial changes that came into effect from July 1, it helps to stay updated on the broader regulatory calendar rather than just this one proposal.

If you want to submit feedback on the consultation paper itself, SEBI's website accepts public comments until August 13, 2026, and any retail investor is free to weigh in before the framework is finalised.

Frequently Asked Questions (FAQ)

1. Has SEBI's new dispute resolution framework already come into effect?

Not yet. As of now it is a consultation paper released on July 23, 2026, and SEBI is accepting public comments until August 13, 2026, before finalising the rules.

2. What is the ODR mechanism in the securities market?

ODR, or Online Dispute Resolution, is the stage an investor can move to after the SCORES complaint process, involving conciliation and arbitration to resolve disputes with brokers, listed companies, or other market participants.

3. Why does SEBI want to shift ODR administration to stock exchanges?

Stock exchanges and depositories already have direct regulatory oversight over brokers and listed entities, which SEBI believes will help enforce dispute outcomes more effectively than independent ODR institutions.

4. How much faster will complaints be resolved under the new proposal?

SEBI estimates the changes could reduce the overall dispute resolution timeline by around 21 days, mainly by escalating unresolved SCORES complaints directly to the conciliation stage.

5. Does this proposal affect Alternative Investment Fund investors?

Yes. AIF investors will get the option to use pre-agreed contractual dispute mechanisms instead of the mandatory ODR platform, and legal protections will apply equally regardless of whether the AIF is structured as a trust, company, or LLP.

6. What happens if a broker or company appeals an arbitration award?

Under the proposed rules, if the entity challenges an arbitration award that favours the investor, it must first deposit the full award amount with the Market Infrastructure Institution before proceeding with the appeal.

7. Where can retail investors currently file a complaint against a broker or listed company?

Investors can file complaints through SEBI's SCORES platform, which is the first formal step before escalating unresolved matters to the Online Dispute Resolution mechanism.