SEBI’s New Proposals for Strengthening MII 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.
Why the Review?
• 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)
SEBI has suggested:
• Two Executive Directors be appointed to head:
• Critical Operations
• Regulatory, Compliance, Risk Management and Investor Grievances
These EDs would:
• 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
Discretion on Third Vertical
• The third vertical, ‘Commercial Interests and Business Development,’ may also have an ED, but this is left to the discretion of the MII.
Other Governance Changes Proposed
• 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.