The Securities and Exchange Board of India has rolled out new rules in the way stock exchanges, clearing corporations, and depositories — together known as Market Infrastructure Institutions (MIIs) — appoint and manage key officials.
Key personnel like chief compliance officer (CO), chief risk officer (CRiO), chief technology officer (CTO), and chief information security officer (CISO) will now be appointed through an external expert agency. This agency will recommend candidates to the nomination and remuneration committee (NRC), which will then send its suggestions to the MII's board for final approval.
The same process will apply for re-appointment, resignation, or termination of these officials. SEBI has also made it mandatory to give these officials a fair hearing before removal.
Further, the regulator has tweaked the existing rules on movement of personnel between competing MIIs. Now, each MII's board will decide the “cooling-off” period — or the waiting time — before a key official, including the managing director, can join a rival institution.
SEBI has also directed that if a public interest director (PID) is not re-appointed after their first term, the reason must be recorded and shared with the regulator.
Previously, a one-year cooling-off period was mandated under SEBI regulations for PIDs and non-independent directors moving from one MII to another.
This has now been replaced with a provision allowing the governing board of each MII to prescribe its own cooling-off period, including for KMPs and managing directors.
These changes will come into effect 90 days after the circular is officially published. MIIs have been asked to update their internal rules and systems to ensure smooth implementation.
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