SEBI modifies norms in order to strengthen structure and achieve better governance of exchanges

21 Dec 2022 , 12:12 PM

The functioning of these institutions is anticipated to become more transparent and accountable as a result of these regulatory changes, according to SEBI.

The decision to tighten and examine the regulations comes in the wake of charges of bad corporate governance against previous members of the National Stock Market, India’s largest stock exchange, including former MD and CEO Chitra Ramakrishna.

According to SEBI, the modifications take effect 180 days after being published in the Official Gazette. The choice was made today during the regulator’s board meeting.

The critical activities of Market Infrastructure Institutions (MIIs), which include regulatory, compliance, and risk management, as well as other functions like business development, have been divided into three categories.

In accordance with the rules governing board governance, MIIs must nominate public interest directors who have experience in technology, law and regulation, finance and accounts, and capital markets.

The nomination and pay committee will also be in charge of hiring and firing key managerial individuals.

Regarding data sharing, SEBI stated that MIIs would need to create an internal data sharing and monitoring strategy that would include how data would be shared, what sorts of data might be shared, and an escalation matrix.

To protect investors from any widespread unfavorable effects, SEBI has reinforced the framework for stock brokers certified as qualified stock brokers, who must adhere to improved risk management techniques.

In order to increase participation in the domestic corporate bond market and give managers of alternative investment funds (AIFs) more investment flexibility, SEBI allowed AIFs to participate in Credit Default Swaps (CDS), both as protection buyers and sellers, subject to risk-reduction requirements.

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