New Delhi

Marketsregulator Sebi proposed changes to the eligibility criteria for directors on governing boards of market infrastructure institutions (MIIs), along with standard qualification and experience norms for key officials such as chief technology officers and chief information security officers.

In its consultation paper, the regulator said the proposals are aimed at strengthening the governance of MIIs, which include stock exchanges, clearing corporations, and depositories. Sebi said MIIs faced practical difficulties finding suitable candidates, especially for public interest director positions, due to existing restrictions.

These rules often disqualify expert candidates from joining an MII board if they are directors at any company even remotely linked to a stockbroker or trading member. Under the proposed changes, Sebi said the existing exemption available to directors of public sector banks and financial institutions would be extended to directors of companies with well-diversified shareholding, even if their associates include trading members, clearing members or depository participants. Also, Sebi has proposed defining “well-diversified shareholding” as a company where no shareholder, other than public-sector shareholders, individually or together with persons acting in concert, directly or indirectly owns 10 per cent or more of the stake or voting rights. The regulator said the change would help facilitate the flow of expertise and talent into MIIs while maintaining safeguards against conflicts of interest. The proposals were discussed by Sebi’s Secondary Market Advisory Committee (SMAC) in April this year.

Also, Sebi has suggested that MIIs formulate a Standard Operating Procedure (SOP) detailing the required qualifications, experience, skill sets and certifications for four critical roles -- Chief Technology Officer (CTO), Chief Information Security Officer (CISO), Compliance Officer (CO) and Chief Risk Officer (CRiO).