Ease of Doing Business in the context of Standard Operating Procedure for payment of Financial Disincentives by Market Infrastructure Institutions (MIIs) as a result of Technical Glitch
Summary
SEBI has amended the Standard Operating Procedure for Market Infrastructure Institutions to restrict financial disincentives solely to the institutions, removing penalties for individual Managing Directors and Chief Technology Officers. The regulator will now provide MIIs an opportunity to submit their case before imposing any financial disincentive for technical glitches. Additionally, MIIs are required to conduct internal examinations of glitches and disclose paid disincentives on their websites and in annual reports.
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it has been decided to restrict imposition of existing financial disincentives to MIIs only. Further, SEBI shall provide an opportunity to the concerned MII to make its submission in respect of glitch which shall be considered by SEBI before imposing any financial disincentive as per the instant framework.
“Financial disincentive on Managing Director (MD) and Chief Technology Officer (CTO) of MII Separately” as mentioned in Clauses 3,4,5 of Annexure XII to the Master Circular for Stock Exchanges and Clearing Corporations dated October 16, 2023, and Clauses 3,4,5 mentioned under sub-para 4.70.5.B of the SEBI Master Circular for Depositories dated October 06, 2023, stand deleted.
Further, the MII shall submit a compliance report within 90 days of occurrence of disaster/ business disruption to SEBI providing details of payment of “financial disincentives” including computation of “financial disincentives” as per the SOP and the date when the amount was credited to the aforementioned funds.
MIIs shall disclose on their websites (and in their respective annual reports), the details of financial disincentive paid by them on account of technical glitches. Further, listed MIIs shall make appropriate disclosures required in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding any financial disincentive imposed by SEBI on account of technical glitch.
SEBI on identification of the Technical Glitch resulting into Financial Disincentive to the MIIs, or upon receipt of the information of any such instance shall provide an opportunity to the concerned MIIs to make their submissions in respect of the facts of the case.
MIIs shall carry out internal examination pertaining to occurrence of technical glitches to ascertain individual accountability and take appropriate action including suitable recording and reckoning in the performance appraisal of those individuals. SEBI would retain the right to initiate enforcement action against the individuals at the MII, if there is sufficient ground to do so.
Source: SecMarx — Ease of Doing Business in the context of Standard Operating Procedure for payment of Financial Disincentives by Market Infrastructure Institutions (MIIs) as a result of Technical Glitch. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.