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Informist, Tuesday, Jun. 24, 2025

 

--SEBI issues consultation paper on improving governance of market infra cos

--SEBI proposes mkt infra co's two senior officials to be EDs, on co's board

--SEBI invites public comments by Jul 15 on paper on mkt infra co governance

 

NEW DELHI – The Securities and Exchange Board of India Tuesday issued a consultation paper on strengthening governance of market infrastructure institutions, and has sought public comments on the proposals by Jul. 15. The paper proposes the appointment of executive directors on the board of market infrastructure institutions and clear demarcation of responsibilities of senior officials.

 

The paper has proposed the appointment of two executive directors on the governing board of the market infrastructure institution and a clear outlining of roles and responsibilities of the managing director, proposed executive directors, and specific senior executive positions, including the chief technology officer and the chief information security officer of the market infrastructure institution.

 

SEBI has also proposed establishing clear rules for directorships in other companies by the managing director and the proposed executive directors of a market infrastructure institution. As per SEBI's definition, market infrastructure institutions comprise stock exchanges, clearing corporations, and depositories.

 

SEBI said one of the proposed two executive directors should be for the critical operations vertical, which would cover trading, clearing and settlement, and securities holding. The second executive director, SEBI said, should be in charge of the vertical, which includes regulatory compliance, risk management, and investor grievances. As first-line regulators, the market infrastructure institutions need to give priority to these two verticals over commercial interests and business development, SEBI said.

 

SEBI said currently, the managing director of the market infrastructure institution holds overall authority for all the verticals and is the only senior official serving on the governing board of the institution. The market regulator wants "capable and empowered KMPS (key management personnel) of stature to head the verticals other than business development.

 

The proposed two executive directors will come from the senior executives of the market infrastructure institution. They are expected to facilitate timely communication to the governing board, statutory committees, and the SEBI for corrective actions, the market regulator said in the consultation paper. "This practice of including senior executives beyond the MD on the governing board is also prevalent in many top 100 listed companies," SEBI said.

 

In addition to proposing that the two executive directors be on the governing board of the market infrastructure institution, SEBI wants them to be "of comparable stature to the MD" and that the appointment and re-appointment process for these executive directors be similar to that of the managing director, requiring prior SEBI approval. The executive directors will, however, continue to report to the managing director for administrative purposes, the consultation paper said.

 

On the proposal on external directorships of the managing director, SEBI said current regulations already restrict the managing director from being a shareholder or associate of a shareholder in a subsidiary or any other associated entity. SEBI said the secondary market advisory committee has proposed that the managing director be permitted to serve as a non-executive director of charitable companies registered under section 8 of the Companies Act, 2013, and unlisted state or central government companies, which are not engaged in any commercial activity.  End

 

Reported by Rajesh Gajra

Edited by Saji George Titus

 

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