Sebi extends timeline to submit comments on proposed appointment process of key officials at MIIs

Sebi on Friday extended the deadline to December 31 for submitting public comments on a proposal on the process to appoint key officials of stock exchanges and other market infrastructure institutions and a cooling-off period before they can join a competing institution.

Earlier, the deadline was December 12 for submitting comments.

In a statement on Friday, the Securities and Exchange Board of India (Sebi) said, "It has been decided to extend the timeline to submit the public comments on the consultation paper till December 31, 2024." The regulator, in its consultation paper issued in November, proposed a process for the appointment of KMPs (key managerial personnel) -- Compliance Officer, Chief Risk Officer, Chief Technology Officer, and Chief Information Security Officer – of an MII and cooling-off period for KMPs, including MDs and directors, including public interest directors of an MII joining a competing MII.

On the proposed process for appointment, Sebi stated that market infrastructure institutions (MIIs) comprising stock exchanges, clearing corporations and depositories, should engage an independent external agency to identify suitable candidates for specific KMP roles.

The agency should submit recommendations to the Nomination and Remuneration Committee (NRC) for evaluating the recommendations and forwarding them to both the governing board of the MII and Sebi.

Thereafter, Sebi should review the NRC's recommendations and provide comments within a specified time frame. If no comments are received, the governing board may assume Sebi has no objections.

The governing board should make the final appointment decision, considering NRC's recommendations and Sebi's comments, if any.

Further, the process for reappointment and termination is similar to the appointment process.

The current appointment and removal of the MD are decided by the governing board with Sebi's approval. Other KMPs -- Compliance Officer, Chief Risk Officer, Chief Technology Officer, and Chief Information Security Officer -- are appointed by the MII's NRC.

The proposal aimed at reinforcing the important role of CO, CRiO, CTO and CISO in carrying out their obligations in the public interest, without being influenced by commercial considerations. A need was felt to review the current rule as MIIs presently have high profitability, with significant profit margins and shareholder returns.

On cooling-off periods, it was suggested that Sebi should no longer prescribe a cooling-off period for PIDs of an MII joining another MII.

MIIs should adopt a policy approved by their governing board prescribing a minimum cooling-off period for KMPs, including MDs and directors, including PIDs.

While the current regulations do not prescribe any cooling-off period for the MD and other KMPs, MIIs do individually stipulate cooling-off periods in their employment contracts.