On 12-12-2025, the Securities and Exchange Board of India (‘SEBI’) notified the provisions relating to strengthening governance of Market Infrastructure Institutions (‘MIIs’). These provisions aim to enhance accountability and ensure that MIIs continue to operate in the public interest, maintaining market integrity and stability.
Background:
The importance of MIIs stems from the ever-expanding Indian securities market. With a growing investor base, rising trading volumes, rapid technology adoption, and an increasing number of market intermediaries, there is a pressing need for systematic governance and oversight by MIIs, particularly Stock Exchanges, Clearing Corporations, and Depositories.
Any setback from these institutions can have adverse impact on the securities market.
Thus, to address this SEBI has amended:
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Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 through Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Fourth Amendment) Regulations, 2025.
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SEBI (Depositories and Participants) Regulations, 2018 through SEBI (Depositories and Participants) (Third Amendment) Regulations, 2025.
Notified on 21-11-2025, these amendments will come into effect from 20-12-2025.
Key Provisions:
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Appointment of Executive Directors (‘EDs’)
⮚ EDs will be appointed as members of the Governing Board of Market Infrastructure Institutions, EDs will be appointed. EDs will oversee:
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Reporting Structure of EDs
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Reporting of Key Management Personnel to EDs
⮚ Chief Technology Officer (‘CTO’) and Chief Information Security Officer (‘CISO’) will report to ED of Vertical 1.
⮚ Compliance Officer (‘CO’) and Chief Risk Officer (‘CRiO’) will report to ED of Vertical 2.
⮚ Statutory Committees will continue independent quarterly meetings with these Key Management Personnels.
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Role of Chief Risk Officer
⮚ CRiO will handle system and cybersecurity audits.
⮚ CRiO will be an invitee to SCOT meetings along with CTO and CISO.
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Applicability
⮚ First ED: Within 6 months of amendment implementation.
⮚ Second ED: Within 9 months.
⮚ Reporting provisions apply from ED appointment date.
⮚ CRiO-related provisions apply from 60 days after circular issuance.
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Advisory to Market Infrastructure Institutions
⮚ Take necessary steps for implementation.
⮚ Amend byelaws, rules, and regulations where needed.
⮚ Disseminate these provisions to market participants and publish them on their websites.
• Vertical 1: Critical operations
• Vertical 2: Regulatory compliance, risk management, and investor grievances
⮚ EDs will be selected through open advertisement in national newspapers; and candidates applying must have relevant experience.
⮚ MIIs will then forward two names per post to SEBI for approval, including compensation details.
⮚ Performance evaluation of EDs will be overseen by Public Interest Directors (‘PIDs’).
⮚ MIIs facing genuine difficulties may seek temporary exemptions from SEBI.
⮚ EDs of vertical 1 and 2 will report to the Managing Director (‘MD’).
⮚ Independent quarterly reviews:
• Standing Committee on Technology (‘SCOT’) with ED of Vertical 1.
• Regulatory Oversight Committee (‘ROC’) and Risk Management Committee (‘RMC’) with ED of Vertical 2.
⮚ EDs will submit quarterly reports to the Governing Board and may escalate critical matters directly to SEBI.