SEBI Consultation Paper on Strengthening Governance of Market Infrastructure Institutions (MIIs), Read and Provide Feedback

SEBI has released a consultation paper on Strengthening Governance of Market Infrastructure Institutions (MIIs). You can download consultation paper pdf, read it and provide feedback.

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In recent years, large MIIs such as Stock Exchanges, Clearing Corporations and Depositories have seen a rapid increase in investor base and volumes, and a growing network of intermediaries associated with them. Alongside, they have experienced significant growth in revenue and profitability, and they enjoy high profit margins.

In this context, given the vital role MIIs play as first-line regulators and public utilities in the cause of capital formation, this consultation paper outlines proposals aimed at strengthening the operational and governance framework of MIIs. The proposed steps aim to further ensure that MIIs accord highest priority to public interest, technology and operations, and risk and compliance, over commercial considerations.

SEBI proposals focus on three key areas:

• Appointment of Two Executive Directors (EDs) to the Governing Board: Mandating the appointment of two EDs, each heading “Vertical 1: Critical Operations” and “Vertical 2: Regulatory, Compliance, Risk Management, and Investor Grievances,” as Key Management Personnel (KMPs) and will serve on the MII’s Governing Board.
• Defining Roles and Responsibilities: Clearly outlining the broad roles and responsibilities of the Managing Director (MD), the proposed EDs, and specific KMPs such as the Chief Technology Officer (CTO) and Chief Information Security Officer (CISO).
• Norms on Directorships: Establishing clear norms for the directorships of MDs and the proposed EDs of an MII in other companies.