Parameters for Performance Evaluation of Market Infrastructure Institutions
Summary
The circular mandates Market Infrastructure Institutions to appoint an independent external agency for performance evaluation based on specified criteria and weightages. It establishes a rating framework, principles for agency appointment, and timelines requiring evaluations every three years with specific submission deadlines. Additionally, it prescribes performance evaluation metrics for Key Management Personnel, ensuring significant weightage is assigned to critical operational and regulatory outcomes.
Text
every recognised stock exchange, recognised clearing corporation and depository (collectively referred as Market Infrastructure Institutions (MIIs)) shall appoint an independent external agency to evaluate its performance and the performance of its statutory committees within such periodicity and in such a manner as may be specified by the Board.
The minimum criteria for the independent external evaluation of performance of MIIs and their weightages are as under: Resilience in technology and processes of MII, in delivery of its core functions (40%), Investor Education and Protection (17%), Efficient discharge of Regulatory role by MII (15%), Compliance with Regulatory Norms (10%), Evaluation of Governance Practices (8%), Adequacy of Resources (5%), Fair access and treatment to all stakeholders and information disclosure (5%).
a rating framework has been developed which would be assigned after evaluation of the MIIs. The rating would reflect the Independent External Agency’s judgment on the performance of the MII in respect of expected outcomes.
The Independent External Agency shall be appointed with prior No Objection Certificate (NOC) from SEBI and on such terms and conditions, including fees, timelines, etc. as may be approved by the Governing Board of the MII.
The Independent External Agency shall have requisite domain knowledge, experience and expertise on matters concerning the securities market and the functioning of the MII.
MII shall ensure that there is no conflict of interest in the appointment of the Independent External Agency and the Agency had not been employed/hired by the MII for the evaluation period and till submission of the report.
The independent external evaluation shall take place once in three years for each MII. The first independent external evaluation shall be only for the Financial Year (FY) 2024-2025. The report of the same shall be submitted to the Governing Board of the MII and SEBI by September 30, 2025. The subsequent independent external evaluation(s) shall be for a block of next three FYs and so on. Upon completion, a report in this regard shall be submitted to the Governing Board of the MII and SEBI within 6 months from the end of the 3rd FY to be evaluated.
The performance evaluation of MD should provide at least 50% weightage towards Verticals 1 and 2 related outcomes.
The performance evaluation of MD and KMPs shall include the minimum criteria as specified for the MIIs at Annexure-A. However, for KMPs the criteria and corresponding weightages may be adjusted depending upon the specific roles and responsibilities assigned to such KMPs.
The provisions of this Circular shall come into force from 30th day of its issuance.
take necessary steps and put in place necessary systems for the implementation of the above;
make necessary amendments to the relevant bye-laws, rules and regulations, wherever applicable, for the implementation of the above;
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Parameters for Performance Evaluation of Market Infrastructure Institutions. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.