SEBI recently came out with guidelines to strengthen accountability and improvegovernanceofstockexchanges and other market infrastructure institutions (MIIs)byasking them toresolve whistleblower complaints within 60 days of receipt. Additionally, SEBI asked MIIs, comprising stock exchanges, clearing corporations and depositories, to adopt RegTech (regulatorytechnologies) and SupTech (supervision technologies) for better regulatory and supervisory mechanisms. Also, the regulator outlined guidelines for back office vendors, public interest directors (PIDs) meetings, establishing a standard operating procedure for disciplinary actions against Key Management Personnel (KMPs), disclosure of board meeting agendas and minutes, quarterly reporting by theCompliance Officer and half-yearly reporting by the Chief Risk Officer. The new guidelines will become effectivefromApril1, theSecuritiesand ExchangeBoard of India (SEBI) said in its circular.

 

On whistleblower policy, SEBI asked MIIs to resolve whistleblower complaints within 60 days of receipt.Theregulatorhas specified the role of the audit committee in overseeing whistleblower complaints. It is tasked with receiving and investigatingsuchcomplaintsandmakingappropriate decisions, including recommending further actions when necessary. The committee is required to submit a detailed quarterly report to the MIIs Governing Board, outlining the complaints received, the actions taken, and any unresolved issues. If a decision cannot be reached on a particularmatter,itmust escalate theissue to the Governing Board forresolution. With regards to RegTech and SupTech,SEBIaskedMIIstoimplement systems enabling members or participants, such as stock brokers, clearing members,anddepositoryparticipants, to make submissions online, reducing reliance on physical documentation. These systems should generate alerts andreports tosupportregulatoryobjectives.

 

Also,MIIs are required todisclose key information about their members or participants on their websites, includingdetailsofinvestor grievances (resolvedandpending) for thelast three financial years, regulatory actions taken, net worth as of the previous financial year, and other relevant data. Additionally, any significant regulatory non-compliance by a member mustbesharedwithotherMIIstoensure transparency and accountability. To ensure regulatorycompliancebybackoffice vendors or outsourced agencies appointed by MIIs and their members or participants, MIIs must establish policies fortheirappointmentandmonitoring. These policies should clearly identify potentialrisks associated with such vendors or agencies and outline measures to mitigate them. Additionally, thepoliciesmustdefine minimum standards or thresholds, both qualitative and quantitative that vendors must meet to qualify for appointment, including standards for technology vendors.