Parameters for external evaluation of Performance of Statutory Committees of Market Infrastructure Institutions (MIIs); and Mechanism for internal evaluation of Performance of MIIs and its Statutory Committees
Summary
This circular mandates Market Infrastructure Institutions to conduct external and internal evaluations of their statutory committees. It establishes specific criteria, weightages, and a rating framework for the independent external evaluation process. Additionally, it outlines principles for appointing external agencies and sets strict timelines for both external and internal reporting.
Text
Regulation 29 of SECC Regulations, 2018 and Regulation 30 of D&P Regulations, 2018 provides for the constitution of functional, oversight, and investment committees by every recognised Stock Exchange, recognised Clearing Corporation and Depository.
Every 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 Statutory Committees of MIIs and their weightages are: Roles, Responsibilities and Duties (40%), Effectiveness of meetings (30%), and Governance aspect (30%).
A rating framework has been developed which would be assigned after evaluation of Statutory Committees of MIIs to ensure consistency in assessment and outcomes across similar MIIs.
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/or the functioning of the Statutory Committees of MIIs.
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 of Statutory Committees 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.
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.
Every recognised stock exchange, recognised clearing corporation and depositories shall internally conduct annual evaluation of its performance and the performance of its statutory committees in such a manner as may be specified by the Board.
The MIIs shall develop the set of criteria for comprehensive internal evaluation of performance of the MII and its Statutory Committees.
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Source: SecMarx — Parameters for external evaluation of Performance of Statutory Committees of Market Infrastructure Institutions (MIIs); and Mechanism for internal evaluation of Performance of MIIs and its Statutory Committees. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.