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Informist, Thursday, Aug. 7, 2025

 

NEW DELHI – The Securities and Exchange Board of India Thursday said stock exchanges, clearing corporations, and depositories will jointly carry out the annual inspections of selected members across all segments in which the members operate, with effect from Dec. 1.

 

At present, there is no requirement for joint inspections, with each market infrastructure institution conducting them separately. This puts a load on the member being inspected, the market regulator said in a circular.

 

According to the circular, if a selected member has membership on multiple exchanges, then all the exchanges will inspect the member. Further, if the selected stock exchange member is also a clearing member on one or more clearing corporations, then the clearing corporation will also join the exchanges in the annual inspection of that member. If the selected member is also a depository participant, the depository will be part of the annual inspection.

 

SEBI said each of these market infrastructure institutions will inspect the activities of the member pertaining to their sphere, but in a joint manner by sharing information.

 

The market regulator has also revised the criteria for annual inspection. The SEBI said top 25 members of a stock exchange, a clearing corporation, or a depository, in terms of high and recurring penalties for non-reporting or short reporting of margins, client code modifications, or other high-risk compliance issues, "shall be inspected irrespective of when they were last inspected." This will also apply to the top 25 members in terms of investor complaints and arbitration cases filed by investors as a percentage of the number of active clients.

 

Other members will be inspected jointly by the market infrastructure institutions at least once in three years. The qualified stock brokers will continue to be governed by SEBI's circulars on enhanced obligations and responsibilities for them, the circular said.

 

SEBI directed the market infrastructure institutions to frame a joint standard operating procedure by Nov. 1 for the modalities of the joint inspections and the criteria for designating one of them as a lead market infrastructure institution, which will initiate the enforcement action for such inspections.  End

 

Reported by Rajesh Gajra

Edited by Saji George Titus

 

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