SEBI Releases Guidelines To Evaluate Market Infra Institutions’ Statutory Committees

SEBI releases guidelines to evaluate market infra institutions’ statutory committees

This would be mandated every three years commencing from Financial Year 2024-2025

The Securities and Exchange Board of India (SEBI) has issued guidelines for evaluating market infrastructure institutions' (MIls) statutory committees to enhance transparency and accountability. Under the guidelines, MIIs, comprising stock exchanges, clearingn corporations, and depositories will have to appoint an independent external agency to evaluate their performance and the functioning of their statutory committees.

The first evaluation, involving the role and responsibilities of committees and effectiveness of meetings and governance aspects, must cover FY 2024-2025, with a report by 30 September 2025.

Additionally, the MIIs have been directed to conduct an annual internal evaluation of their and statutory committees’ performance.

Its report must be submitted to the Governing Board within three months of the end of each financial year.

The evaluation will give 40 percent weightage to roles and responsibilities, and 30 percent each to the effectiveness of meetings and governance.

On the appointment of an external agency, the market regulator said that MIIs must first obtain approval from it, and the agency should have securities market experience and be free from conflicts of interest.

SEBI has directed MIIs to implement the steps to comply with the processes and amend the rules, which must be shared with market participants.