Guidelines for Appointment of Chief Executive Officer and Governing Bodies for Derivative Segment
Summary
This document mandates the National Stock Exchange and Stock Exchange, Mumbai to appoint specific governance bodies and executives for their derivative segments within two months of SEBI approval. It establishes detailed guidelines for the composition, election, and tenure of the Governing Board, Clearing Council, and Statutory Committees. Furthermore, it outlines the appointment procedures, duties, and termination conditions for the Chief Executive Officers of the exchange and clearing house.
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You are advised to appoint: Governing Board of Derivative Exchange/Segment, Clearing Council, Chief Executive Officer of the Derivative Exchange/Segment, Chief Executive Officer of Derivatives Clearing House/Corporation, and Statutory Committees... within a period of two months from the date of final approval...
Governing Board means the governing body of Derivative Exchange/Segment which shall include Governing Council/Executive Committee... Clearing Council means the governing body of derivatives clearing house / clearing corporation... Chief Executive Officer... means the person responsible for day to day operations... Statutory Committees means the Disciplinary Action Committee, Arbitration Committee and Defaulters Committee... Board means the Securities and Exchange Board of India(SEBI).
The Derivative Exchange/Segment should have a separate Governing Board which shall not have representation of Trading/Clearing Members... beyond 40% of the total members on the Governing Board provided that no Trading Member/Clearing Member shall be allowed to simultaneously be on the Governing Board of the Derivative Exchange/Segment and any of the underlying securities market.
The members of the Governing Board of the Derivative Exchange /Segment shall elect a Chairman within a period of 10 days from the constitution of the Board and if the Chairman is a Trading/Clearing Member then he shall not carry on any trading or clearing business on any Exchange during his tenure as Chairman.
Not less than 60% of the members on the Governing Board of the Derivative Exchange/Segment shall be public representative, Board nominees or any other person appointed with the approval of the Board. Provided that not more than 50% of such members shall be common with the Governing Board / Executive Committee of the underlying securities exchange.
One-third of the elected members under clause 1(i) shall retire at each annual general meeting and shall be eligible to offer themselves for re-election. Provided, that where a person has been a member elected for two consecutive terms... he shall not offer himself for re-election for a further period of two years.
The members appointed under clause (iii) above shall not be subject to retirement by rotation and shall hold office at the pleasure of the Board or as per the provision of the Act and the Rules under which the Exchange is constituted.
The clearing council shall not have any representation from the trading or clearing members.
The members of clearing council shall be persons of integrity having necessary professional competence and experience in the areas related to securities / derivatives markets. Their appointment however will be subject to approval by the Board.
The members on the clearing council shall elect a Chairman within a period of 10 days from the constitution of the clearing council.
For the purpose of appointment of the non-elected members on the governing board of the derivatives exchange / segment or on the clearing council, the derivatives exchange /segment and the clearing council may forward the names of persons to the Board for approval... The Board shall, however have the right to appoint any other persons...
The appointment, the terms and conditions of service, the renewal of appointment and the termination of service of the Chief Executive Officer of derivatives exchange/segment and the clearing house / corporation shall be subject to prior approval of the Board.
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Source: SecMarx — Guidelines for Appointment of Chief Executive Officer and Governing Bodies for Derivative Segment. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.