SEBI mulls market infrastructure institution rejig to boost governance

• The Securities and Exchange Board of India (SEBI) has released a consultation paper (June 24, 2025) proposing structural reforms to improve the governance of Market Infrastructure Institutions (MIIs), such as stock exchanges and clearing corporations.

• Due to the expanding scope of India’s securities market.

• Past governance lapses in MIIs could adversely impact financial market stability and the broader economy.

Key Proposal: Appointment of Two Executive Directors (EDs)

• Two Executive Directors be appointed to head:

• Critical Operations

• Regulatory, Compliance, Risk Management and Investor Grievances

• Report to the Managing Director (MD)

• Be included on the Governing Board of the MII, bringing them to equal stature with the MD

• Require SEBI’s approval for appointment/reappointment

• Submit quarterly reports to SEBI and the Governing Board

• The third vertical, ‘Commercial Interests and Business Development,’ may also have an ED, but this is left to the discretion of the MII.

• MDs of MIIs may now take non-executive directorships in:

• Unlisted government companies (central or state)

• Non-profit organizations

• EDs, however, will only hold directorships in MII subsidiaries, and not in any external firms.