The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing changes to the appointment process for Key Management Personnel (KMPs) and introducing a minimum cooling-off period for Market Infrastructure Institutions (MIIs). These measures aim to bolster governance in stock exchanges, clearing corporations, and depositories, while maintaining their primary role as public utility institutions.
Key Proposals:
- Appointment of KMPs:
- SEBI has suggested an external agency recommend suitable candidates for key roles such as Compliance Officer (CO), Chief Risk Officer (CRiO), Chief Technology Officer (CTO), and Chief Information Security Officer (CISO).
- Final appointments will involve approval from SEBI, the Nomination and Remuneration Committee (NRC), and the MII Governing Board.
- Cooling-Off Periods:
- A uniform cooling-off period for KMPs and Directors (including Public Interest Directors) moving to competing MIIs has been proposed.
- SEBI will no longer prescribe cooling-off periods for Public Interest Directors, leaving it to individual MII boards to set policies.
Background:
MIIs play a critical role in India’s financial ecosystem by providing essential trading, clearing, and record-keeping infrastructure. The proposal underscores the need for independent and capable leadership to prioritize compliance, technology, and risk management over commercial interests.
Public Consultation:
SEBI is inviting public comments on these proposals until December 12, 2024. Comments can be submitted online or via email to SEBI.
These steps are expected to ensure robust governance and independence within MIIs, ultimately enhancing market integrity and investor confidence
