MII Governance Overhaul: SEBI’s Executive Director Proposal
Why in the news
SEBI floated a plan to rebalance power inside exchanges, clearing corporations and depositories, where the Managing Director now holds sweeping authority.
Background
- MIIs: stock exchanges, clearing corporations, depositories.
- Governed by the SCRA 1956, SEBI Act 1992, Depositories Act 1996, plus SECC and D&P Regulations 2018.
Three verticals
| Vertical | Functions |
|---|---|
| 1 | Critical operations: trading, clearing, settlement |
| 2 | Regulatory, compliance, risk, investor grievances |
| 3 | Business development and others |
SEBI wants resources prioritised for Verticals 1 and 2.
Reasons
- Fast growth in markets, technology and capital flows needs stronger governance.
- The MD outranks other Key Managerial Personnel; roles of CTO, CISO and proposed EDs are unclear.
Proposals
- Two Executive Directors for Verticals 1 and 2, on the Governing Board, of stature comparable to the MD, appointed with SEBI approval.
- EDs report administratively to the MD; SCOT (technology) reviews Vertical 1 ED, ROC and RMC review Vertical 2 ED. Department heads report to their ED.
- MD may be non-executive director only in Section 8 and non-commercial unlisted government companies; EDs only in an MII subsidiary.
Consultation
- Comments due 15 July 2025 via portal or email; draft amendments in Annexure-2.
Exam angle
- Number of EDs: two.
- MIIs: exchanges, clearing corporations, depositories.