MARKETS regulator SEBI on Friday decided to strengthen the governance framework of market infrastructure institutions (MIIs) including stock exchanges by mandating the appointment of two executive directors (EDs) to bolster operational oversight. The framework, if implemented, is aimed at ensuring MIIs (market infrastructure institutions) -- which have witnessed sharp growth in investor base, revenue, and market activity -- place public interest, compliance, and systemic stability above commercial considerations.

 

The two EDs, to be designated as KMPs (key managerial personnels), would head “critical operations” and “regulatory, compliance, risk management, and investor grievances”, respectively, and be inducted into the MII’s governing board alongside the Managing Director (MD). Currently, the MD holds overarching authority across all verticals, but Sebi noted that functions related to technology, risk management and investor protection need empowered leadership to prevent governance failures. Also, SEBI has strengthened the roles of other KMPs, including Chief Technology Officer, Chief Information Security Officer,

 

Chief Risk Officer, and Compliance Officer to ensure robust internal systems. Additionally, SEBI board has established clear norms for the directorships of Managing Directors and the proposed EDs of an MII in other companies. “Sebi board approved the appointment of two EDs of appropriate stature and independence as heads of Vertical 1 and Vertical 2, who would also serve on the Governing Board of the MII,

 

” SEBI Chairman Tuhin Kanta Pandey said here after the board meeting. Sebi said it's crucial that MIIs give priority to public interest (represented by Vertical 1 - Critical Operations, and Vertical 2 - Regulatory, Compliance, Risk Management, and Investor Grievances, of the MII) over commercial inter