SEBI Amends Rules For Directors At Market Infrastructure Institutions

SEBI amends rules for directors at market infrastructure institutions

The new norms are meant to strengthen governance

The Securities and Exchange Board of India (SEBI) has amended its rules for stock exchanges, clearing corporations and depositories.

It has mandated a cooling-off period for directors before joining a rival institution. The non-independent directors could shift to competing boards after SEBI’s consent.

The changes have been made to the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 and the SEBI Depositories and Participants Regulations, 2018.

In two separate notifications of 30 April, the markets regulator stated that a non-independent director serving on the board of a market infrastructure institution would be eligible for direct appointment to the board of a competing institution after meeting two conditions. One, a cooling-off period, two, prior approval from SEBI.

It added that after the expiry of the term at a market infrastructure institution (MII), a public interest director could be appointed at another stock exchange, clearing corporation. or a depository, with its prior approval, for three years.

However, SEBI clarified that the cooling-off period would only apply on appointment as a public interest director in a competing MII.

The new rules are meant to strengthen governance at MIIs while safeguarding market integrity through effective policies.

The move followed after SEBI’s board reviewed the norms in March to appoint officials of stock exchanges and other market institutions.