Provisions relating to Strengthening Governance of Market Infrastructure Institutions (MIIs)
Summary
This circular mandates the appointment of Executive Directors for Vertical 1 and Vertical 2 within Market Infrastructure Institutions to strengthen governance. It establishes a new reporting structure where key management personnel report to these Executive Directors rather than the Managing Director. The provisions include specific timelines for implementation, exemption mechanisms for smaller institutions, and enhanced oversight by statutory committees.
Text
The EDs of Vertical 1 (Critical Operations) and Vertical 2 (Regulatory, compliance, risk management and investor grievances) shall be members on the Governing Board of the MII.
Application for appointment of EDs shall be through open advertisement in all editions of at least one national daily.
At least two names for the post of an ED, without any order of preference, shall be forwarded to SEBI for approval. At the time of seeking approval of SEBI, the MII shall also seek approval for the compensation of the EDs.
Prior to completion of term of the existing ED, the MII shall forward the names to SEBI at least two months before the last working day of the existing ED.
Public Interest Directors (PIDs) shall ensure that the performance of EDs is assessed based on an annual performance evaluation mechanism similar to that of MD.
MIIs facing genuine practical difficulties in complying with the provisions relating to appointment of ED may seek exemption for a certain period of time from SEBI, which shall be evaluated on a case-by-case basis.
EDs of vertical 1 and 2 shall report to the Managing Director (MD) of the MII for all purposes.
The Standing Committee on Technology (SCOT) shall hold separate quarterly meetings with the ED of Vertical 1, without the presence of MD and other executives.
The Regulatory Oversight Committee (ROC) and Risk Management Committee (RMC) shall hold separate quarterly meetings with the ED of Vertical 2, without the presence of MD and other executives.
EDs will be required to report to the Governing Board of the MII on a quarterly basis, on areas concerning their respective verticals.
All Heads of Department within Vertical 1, including the Chief Technology Officer (CTO) and Chief Information Security Officer (CISO), shall report to the ED of Vertical 1. Similarly, all Heads of Department within Vertical 2, including the Compliance Officer (CO) and Chief Risk Officer (CRiO), shall report to the ED of Vertical 2.
the Statutory Committees shall continue to hold separate meetings with such KMPs at least once a quarter without the presence of the MD and ED.
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Source: SecMarx — Provisions relating to Strengthening Governance of Market Infrastructure Institutions (MIIs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.