Sebi revises rules for appointing key market officials

The board of India's markets regulator, Sebi, met on Monday to review the appointment process for key officials at stock exchanges and other market institutions. In addition, they discussed a cooling-off period before these officials can move to competing institutions. The aim of these measures is to ensure that market infrastructure institutions (MIIs) have qualified and independent key management personnel and directors. These changes are also intended to protect market integrity through better cooling-off policies, according to Sebi chairman Tuhin Kanta Pandey. During the meeting, Sebi looked into the appointment process for Public Interest Directors (PIDs) on MII governing boards. Feedback indicated that these appointments should involve shareholder approval. The board decided to review the cooling-off periods for both PIDs and other key management roles to create more consistency. The officials whose appointments were reassessed include the Compliance Officer, Chief Risk Officer, Chief Technology Officer, and Chief Information Security Officer. Sebi wants these roles to align with the core goals of technological reliability, market integrity, and compliance. Pandey clarified that the current system for appointing PIDs still requires Sebi's approval but does not require shareholder approval. If a PID is not re-appointed after their first term, Sebi must be informed of the reasons. Additionally, Sebi's board approved a delay in implementing changes to regulations for merchant bankers, debenture trustees, and custodians. These changes, approved in December 2024, originally called for a separation of functions into different legal entities. The board will revisit the revised proposals at its next meeting to explore other options for ensuring fair competition in the sector.