The Securities and Exchange Board of India (SEBI) has proposed to overhaul the processes of appointing key management personnel by market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations, and depositories. The regulator plans to align their appointments with that of the managing director (MD) who is appointed by SEBI.

In a consultation paper, the regulator said that the purpose was to ensure that key management personnel are able to operate independent of the short-term commercial considerations. 

They must equally deliver on the regulatory, compliance, risk management and investor grievances verticals. These operations fall under verticals 1 and 2 of MIIs. Vertical 3 works on business development.

“There is a need for able key management personnel of appropriate stature and ability in Vertical 1 and 2. These personnel must be able and willing, and be seen to be able and willing, to operate independent of short-term commercial considerations of Vertical 3 as necessary, to ensure that the MII delivers its primary mandate as a public utility infrastructure institution and as a first line regulator,” SEBI stated.

Joining rival

SEBI has also proposed a cooling-off period for joining a rival MIIs. “While regulations specify a minimum cooling off period for PIDs to move to other MIIs, there is none mandated for the MD, other Directors, and other KMPs.

In view of the above, it is proposed that MII shall adopt and implement a policy approved by its governing board prescribing a minimum cooling-off period for KMPs (including the MD) and their Directors (including PIDs) before joining a competing MII.

“SEBI shall no longer prescribe a cooling-off period for PIDs of an MII joining another MII,” SEBI said.

Related Topics