The Securities and Exchange Board of India (SEBI) has proposed to review the processes for appointing key management personnel by market infrastructure institutions (MIIs) such as stock exchanges, clearinghouses and custodians. The regulator plans to align their appointments with that of the managing director (MD), who is appointed by SEBI.
In a consultation paper, the regulator said the aim was to ensure key management staff can function independently of short-term commercial considerations.
They must deliver equally on regulatory, compliance, risk management and investor complaints. These operations fall under branches 1 and 2 of MIIs. Vertical 3 works on business development.
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“There is a need for capable management personnel of appropriate status and competence in Vertical 1 and 2. These personnel must be able and willing, and perceived as being able and willing, to operate independently of short-term commercial considerations of Vertical 3. where necessary, to ensure that the MII fulfills its primary mandate as a public utility infrastructure institution and a first-line regulator,” SEBI said.
Join rival
SEBI has also proposed a cooling-off period for joining a rival MII. “While the regulations specify a minimum cooling-off period for PIDs to move to other MIIs, there is no mandate for the MD, other directors and other KMPs.
In light of the above, it is proposed that MII shall adopt and implement a policy approved by the Board of Directors prescribing a minimum cooling-off period for KMPs (including the MD) and their Directors (including PIDs) before joining any competitive MII.
“SEBI will no longer prescribe a cooling-off period for PIDs of one MII joining another MII,” SEBI said.
