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Informist, Friday, Sep 20, 2024

 

MUMBAI – Managing directors and chief technology officers of market infrastructure institutions will not have to bear automatic financial disincentives if the institution's systems suffer technical glitches that are in the nature of disaster, the Securities and Exchange Board of India said in a circular today. However, the market infrastructure entities will continue to bear the responsibility and the burden of automatic financial disincentives in the case of such glitches.

 

Stock exchanges, clearing corporations, and depositories are considered as market infrastructure entities by the market regulator. Through the circular, which is effective immediately, SEBI deleted relevant clauses in earlier master circulars for these entities that imposed financial disincentives on managing directors and chief technology officers along with that on the market infrastructure entity.

 

In its last board meeting on Jun 27, SEBI had informed the board that this change was on the anvil. In a press conference following the board meeting, SEBI Chairperson Madhabi Puri Buch said that the role of individuals in a technical lapse or disruption was better based on a judgement of the facts surrounding the case.

 

The individual may have done everything to keep the system going, she said. So keeping the disincentive automatic was not appropriate, she said. SEBI would reserve the right to examine the role of any individual in such cases and take action accordingly, Buch said.

 

This scrutiny of an individual's role was evident in today's circular which stated that market infrastructure entities will have to ascertain individual accountability and take appropriate action. SEBI would retain the right to initiate enforcement action against such individuals if there is sufficient ground to do so, the circular said.  End

 

Reported by Rajesh Gajra

Edited by Ashish Shirke

 

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