SEBI has issued a circular to strengthen the governance of Market Infrastructure Institutions (MIIs) by mandating a structured process for the appointment, re-appointment, termination, or resignation of key management personnel (KMPs) in critical functions like compliance, risk, technology, and information security namely the Compliance Officer (CO), Chief Risk Officer (CRiO), Chief Technology Officer (CTO) and Chief Information Security Officer (CISO). The key highlights of the circular are as below:
(๐)ย ๐๐ซ๐จ๐๐๐ฌ๐ฌ ๐๐จ๐ซ ๐๐ฉ๐ฉ๐จ๐ข๐ง๐ญ๐ฆ๐๐ง๐ญ, ๐ซ๐-๐๐ฉ๐ฉ๐จ๐ข๐ง๐ญ๐ฆ๐๐ง๐ญ, ๐ญ๐๐ซ๐ฆ๐ข๐ง๐๐ญ๐ข๐จ๐ง ๐จ๐ซ ๐๐๐๐๐ฉ๐ญ๐๐ง๐๐ ๐จ๐ ๐ซ๐๐ฌ๐ข๐ ๐ง๐๐ญ๐ข๐จ๐ง ๐จ๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐๐๐๐ฌ ๐จ๐ ๐๐ง ๐๐๐: ย
(i) ๐๐ฉ๐ฉ๐จ๐ข๐ง๐ญ๐ฆ๐๐ง๐ญ: MII must engage an independent external agency to recommend suitable candidates; these recommendations are then reviewed by the Nomination and Remuneration Committee (NRC), which, after discussions with management, forwards its suggestions to the Governing Board of the MIIs, which takes the final decision.
(ii) ๐๐๐๐ฉ๐ฉ๐จ๐ข๐ง๐ญ๐ฆ๐๐ง๐ญ, ๐๐๐ซ๐ฆ๐ข๐ง๐๐ญ๐ข๐จ๐ง ๐จ๐ซ ๐๐๐๐๐ฉ๐ญ๐๐ง๐๐ ๐จ๐ ๐๐๐ฌ๐ข๐ ๐ง๐๐ญ๐ข๐จ๐ง (๐๐, ๐๐๐ข๐, ๐๐๐, ๐๐ง๐ ๐๐๐๐): The NRC shall evaluate each case in consultation with MII management and submit its recommendations to the Governing Board of the MIIs, which will make the final decision and also ensuring due process, including a fair hearing before any termination.
(๐)ย ๐๐จ๐จ๐ฅ๐ข๐ง๐ -๐จ๐๐ ๐ฉ๐๐ซ๐ข๐จ๐ ๐๐จ๐ซ ๐๐๐๐ฌ ๐จ๐ ๐๐ง ๐๐๐ ๐ฃ๐จ๐ข๐ง๐ข๐ง๐ ๐ ๐๐จ๐ฆ๐ฉ๐๐ญ๐ข๐ง๐ ๐๐๐: The Governing Board must define a cooling-off mechanism for KMPs (including MDs) joining a competing MII and the term โcompeting MIIโ refers to a competing recognised stock exchange or recognised clearing corporation, and “competing depository” shall have the same meaning as defined under the SECC Regulations, 2018 and the Depositories and Participants Regulations, 2018
(c)ย ย ๐๐-๐๐ฉ๐ฉ๐จ๐ข๐ง๐ญ๐ฆ๐๐ง๐ญ ๐จ๐ ๐๐ฎ๐๐ฅ๐ข๐ ๐๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐๐ข๐ซ๐๐๐ญ๐จ๐ซ (๐๐๐): If a PID is not re-appointed after their first term, the Governing Board must record the reason and inform SEBI.