The Securities and Exchange Board of India (SEBI) has proposed an overhaul of the process for appointment of key management personnel by market infrastructure institutions (MIIs) such as stock exchanges, clearing companies and depositories. The regulator plans to align their appointments with those of managing directors (MDs) to be appointed by SEBI.
The aim is to enable key management teams to operate independently of short-term commercial considerations, the regulator said in a consultation document.
They must perform equally well in the areas of regulation, compliance, risk management, and investor complaint handling. These operations are classified as MII Vertical 1 and 2. Vertical 3 is working on business development.
“Verticals 1 and 2 need competent key management teams of the right stature and ability to operate independently of vertical 3’s short-term commercial considerations. You have to be willing, and you have to be seen as competent and willing.” To ensure that MII fulfills its primary mission as a public works infrastructure agency and as a front-line regulator. We will take action as required,” SEBI said.
join a rival
SEBI has also proposed a cooling-off period for joining rival MIIs. “While the regulations specify a minimum cooling-off period for transfer of PIDs to other MIIs, it is not mandatory for MDs, other directors, and other KMPs.
In view of the above, the MII has been approved by the Board stipulating a minimum cooling-off period for KMP (including MD) and its directors (including PID) before joining a competing MII. It is proposed that a policy be adopted and implemented.
“SEBI shall not prescribe any cooling-off period for the PID of an MII joining another MII,” SEBI said.
