Mkt regulator Sebi mulls new appointment process for key officials at MIIs

Proposes to align their hiring process with that of MD

The Securities and Exchange Board of India (Sebi) has proposed to overhaul the appointment and reappointment processes of key management personnel by market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations and depositories. 

The regulator plans to align their appointments with that of the managing director (MD) who is appointed by Sebi.

 

Further, Sebi selects and approves the appointments of public interest directors (PIDs) from the candidates suggested by the governing board of the MII.

 

With the proposed changes, other key employees such as compliance officer, chief risk officer, chief technology officer, and chief information security officer, will be reviewed by Sebi. 

 

MIIs will first have to engage an independent external agency for recommendations. The MII nomination and remuneration committee (NRC) will then submit its own recommendations to the governing board of the MII and Sebi.

  The governing board will make the appointment. At present, the appointments are done by NRCs alone.

  In a consultation paper, the regulator said that the purpose was to ensure that key management personnel are able to operate independent of the short-term commercial considerations. They must equally deliver on the regulatory, compliance, risk management and investor grievances verticals. These operations fall under verticals 1 and 2 of MIIs. Vertical 3 works on business development.

  "There is a need for able key management personnel  of appropriate stature and ability in Vertical 1 and 2. These personnel must be able and willing, and be seen to be able and willing, to operate independent of short-term commercial considerations of Vertical 3 as necessary, to ensure that the MII delivers its primary mandate as a public utility infrastructure institution and as a first line regulator," Sebi stated.

  The regulator has proposed a similar process for re-appointment and termination of key management personnel.

  In addition, Sebi plans to remove the regulatory provisions of cooling off period for public interest directors (PIDs) of MIIs. The cooling off period was one year for PIDs joining a competing MII. 

Sebi wants the MIIs to have their policy around the cooling-off period.

  "It is proposed that an MII shall adopt and implement policy approved by its governing board prescribing a minimum cooling-off period for key management personnel (including MD) and their directors (including PIDs) before joining a competing MII. Sebi shall no longer prescribe a cooling-off period for PIDs of an MII joining another MII," the regulator added.