On June 24, 2025, the Securities and Exchange Board of India (“SEBI”) issued a consultation paper on Strengthening Governance of Market Infrastructure Institutions.[1] In light of the significant growth in investor base, transaction volumes, profitability, and systemic importance of Market Infrastructure Institutions (“MIIs”) including Stock Exchanges, Clearing Corporations, and Depositories, SEBI aims to enhance the governance and operational framework of these entities.
MIIs function as critical public utilities and front-line regulators in capital formation. Recognizing this pivotal role, SEBI’s proposed reforms prioritize public interest, technological robustness, and regulatory compliance over purely commercial interests.
Key Proposals
1. Mandatory Appointment of Executive Directors (“EDs”):MIIs shall be required to appoint 2 (two) EDs as Key Managerial Personnel (KMPs), who will also serve on the Governing Board:
(a) ED – Critical Operations (Vertical 1)
(b) ED – Regulatory, Compliance, Risk Management & Investor Grievances (Vertical 2)
2. Defined Roles and Responsibilities: SEBI proposes a structured delineation of roles for senior management to ensure accountability:
(a) Managing Director (MD);
(b) The aforementioned 2 (two) EDs;
(c) Chief Technology Officer (CTO); and
(d) Chief Information Security Officer (CISO).
3. Norms on Directorships: SEBI recommends clear norms to regulate the external directorships of the MD and EDs.
[1]https://www.sebi.gov.in/reports-and-statistics/reports/jun-2025/consultation-paper-on-strengthening-governance-of-market-infrastructure-institutions-miis-_94773.html