SEBI proposes revamp of MIIs to spice up governance

Securities and Exchange Board of India (SEBI) proposed measures to strengthen the governance of market infrastructure establishments (MII)  in a session paper launched on June 24.

The want for evaluation comes within the backdrop of increasing scope of the securities market and the hostile results slippages in governance in these establishments might have on the broader economic system, SEBI officers wrote within the paper.

The markets watchdog proposed MIIs, like inventory exchanges or clearing companies, appoint two government administrators reporting to the Managing Director. SEBI had already proposed three broad verticals in MIIs – ‘Critical Operations,’ ‘Regulatory, Compliance, Risk Management and Investor Grievances’ and ‘Commercial Interests and Business Development.’

SEBI now stated that the primary two needs to be a precedence in governance “to make sure the orderly functioning and growth of the securities market.” 

The two EDs will head the primary two verticals, SEBI proposed. Appointment of an ED for the third vertical has been left to the discretion of the MIIs, it added. Under the present laws, solely the MDs of MIIs are allowed to be on the Governing Boards. SEBI has now proposed that the Executive Directors of the 2 verticals even be a part of the board and are in comparable stature with the MD.  This signifies that the appointment and re-appointment of EDs shall be much like that of the MD, which can want SEBI’s regulatory approval. EDs are required to report back to the Governing Board and SEBI quarterly on issues regarding their respective verticals, SEBI stated in its session paper. 

The regulator proposed that MDs of the MIIs can now take non-executive directorships in an unlisted authorities firm, both central or State, or in a non-profit firm. EDs nevertheless is not going to maintain directorships in corporations apart from the MII’s subsidiary, SEBI proposed. The proposals shall be open for public consultations till July 15.