Sebi defines weightage for rating stock exchanges over performance

The report for first such external evaluation of performance will be submitted by September 30

The Securities and Exchange Board of India (Sebi) on Thursday issued parameters for evaluating the performance of statutory committees of market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations, and depositories.

 

Under this framework, MIIs will be rated to ensure consistency in assessment and outcomes across the statutory committees of similar MIIs.

 

The rating will also help the regulator track trends within the key players of the market ecosystem.

 

Sebi has specified weightage for each criterion and sub-parameters for the independent external evaluation of performance.

 

Responsibilities and duties of statutory committees have been given a weightage of 40 per cent in the overall rating. These include action taken on Sebi inspection observations, implementation of recommendations of the governing board of the MII, receptiveness to opposing views, and approach in deliberating upon complex issues, among others.

 

 

Effectiveness of meetings and governance aspects have been allotted 30 per cent weightage each in the performance evaluation.

 

Under these, MIIs will have to track whether there were any violations of the code of conduct, whether their functioning was at any point in conflict with the role of the MII as a public utility infrastructure, and whether commercial benefits were given priority over their role as first-level regulators.

 

The independent external evaluation will be conducted once every three years for each MII, while the first such evaluation will be only for the financial year 2024-25.

 

The report for the same will be submitted to Sebi and the governing boards of the MIIs by September 30, 2025.

 

MIIs will have to appoint an independent external agency with a prior no-objection certificate from Sebi. This agency will be required to have domain knowledge, experience, and expertise, and should not have any conflict of interest.

 

Market ecosystem players have also been asked to conduct an internal evaluation of performance.