Under the new proposed framework, MIIs must engage an independent external agency to identify suitable candidates in areas like compliance, risk management, technology, and information security.
The nomination and remuneration committee (NRC) of the MII will evaluate these recommendations before sending them to the governing board and Sebi for approval.
This initiative seeks to ensure that key managerial appointments maintain independence from commercial interests and uphold the public utility responsibilities of market infra institutions.
By giving greater authority to independent external agencies and statutory committees, Sebi aims to foster transparency and accountability in these crucial appointments.
In a move to address potential conflicts of interest, Sebi has also proposed that MIIs implement a minimum cooling-off period for KMPs and directors before they can join a competing MII.Currently, only public interest directors (PIDs) face a one-year cooling-off period. Sebi suggests extending this requirement to include managing Directors (MDs), other directors, and KMPs as well.The proposed cooling-off period policy, to be approved by MII governing boards, will ensure that the transition of personnel between competing entities does not compromise market integrity.
The proposals aim to strengthen governance in India’s capital market infrastructure and ensure impartiality in the roles of KMPs. The regulator has invited public comments on these proposals by December 12, 2024.