Sebi comes out with appointment process of senior officials at MIIs

Economic Times

26-05-2025

Markets regulator Sebi on Monday came out with a process to appoint specific key officials of stock exchanges and other market institutions.
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Markets regulator Sebi on Monday came out with a process to appoint specific key officials of stock exchanges and other market institutions. These measures are aimed at ensuring that MIIs ( market infrastructure institutions ) are staffed with qualified, independent key management personnel (KMPs) and directors while safeguarding market integrity through effective cooling-off policies."To strengthen the governance framework of stock exchanges, clearing corporations and depositories (collectively referred to as MIIs), it is required that the KMPs of MIIs in the crucial areas of operations, such as compliance, risk management, technology and information security are of appropriate stature and independence," Sebi said in its circular.Accordingly, Sebi came out with a process for the appointment, re-appointment, termination or resignation of Key Management Personnel like the Compliance Officer, Chief Risk Officer, Chief Technology Officer and Chief Information Security Officer.On the appointment process, Sebi said an external agency will identify suitable candidates.The Nomination and Remuneration Committee (NRC) will review and recommend to the Governing Board of MIIs. Further, the Governing Board will make the final decision.With regards to re-appointment, termination, or resignation, Sebi said NRC will evaluate and recommend action to the Governing Board and the final decision rests with the the board.The regulator said that KMPs should be given a fair hearing before termination."While the Governing Board of the MII sets the overall tone, a culture of prioritising efficient discharge of responsibilities towards public interest falling under Verticals 1 and 2, over commercial interest under Vertical 3 must be ingrained at the operating level as well."Along with having a capable and efficient Managing Director (MD), there is a need for KMPs of appropriate stature and ability in Vertical 1 and 2 to ensure that the MII delivers its primary mandate as a public utility infrastructure institution and a first-line regulator," Sebi said.On the cooling-off period for KMPs moving to competitor MIIs, Sebi said that Governing Boards will decide on cooling-off periods for KMPs (including MDs) before they can join a competing MII.The regulator said that cooling-off rules for Public Interest Directors (PIDs) and Non-Independent Directors have been updated through Gazette notifications (effective 90 days after April 30, 2025).Additionally, Sebi also reviewed the process for re-appointing Public Interest Directors on the governing board of MIIs."It has been decided that in case the existing PID after completion of his first term is not considered for re-appointment by the Governing Board of the MII, the rationale for the same shall be recorded and informed to Sebi," the regulator said.These provisions will be applicable from the 90th day from this Monday, the regulator said.