In two separate notifications dated April 30, Sebi said that a non-independent director serving on the board of a market infrastructure institution will be eligible for direct appointment to the board of a competing institution after meeting two conditions — a cooling-off period and prior approval of the appointment from the regulator
New Delhi: Markets regulator Sebi has strengthened the governance framework of market infrastructure institutions — stock exchanges, clearing corporations and depositories — by prescribing a mandatory cooling-off period for directors before they can join a competing institution.
To give this effect, Sebi has amended Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 or SECC Regulations as well as Depositories and Participants norms 2018.
In two separate notifications dated April 30, Sebi said that a non-independent director serving on the board of a market infrastructure institution will be eligible for direct appointment to the board of a competing institution after meeting two conditions — a cooling-off period and prior approval of the appointment from the regulator.
“Non-independent director on the governing board of a recognised stock exchange or a recognised clearing corporation may be appointed in another recognised stock exchange or a recognised clearing corporation or a depository with the prior approval of the Board (Sebi), only after a cooling-off period as may be specified by the governing board of such recognised stock exchange or recognised clearing corporation,” Sebi said.
After the expiry of the term at an MII, a public interest director can be appointed with the prior approval of Sebi for a further term of three years in another stock exchange or a clearing corporation or a depository.
Sebi clarified that the cooling-off period would be applicable only in case of appointment as a public interest director in a competing market infrastructure institution (MII).
The moves are aimed at strengthening governance at MIIs while safeguarding market integrity through effective cooling-off policies.
This came after the board of Sebi in March reviewed the norms for appointing specific key officials of stock exchanges and other market institutions, along with a cooling-off period before they can join a competing institution.