SEBI Orders Two Executive Directors at Every Stock Exchange for Better Oversight
SEBI mandates two Executive Directors at stock exchanges and MIIs to strengthen governance.
The Securities and Exchange Board of India (SEBI) on Friday announced significant reforms to strengthen the governance framework at Market Infrastructure Institutions (MIIs), including stock exchanges. As part of the measures, SEBI has mandated the appointment of two Executive Directors (EDs) to enhance operational oversight and regulatory compliance.
Under the new structure, the ED of Vertical 1 will head critical operations, while the ED of Vertical 2 will oversee regulatory functions, compliance, risk management, and investor grievance redressal. Both EDs will also be inducted into the MII’s Governing Board to ensure strategic alignment and accountability.
To promote transparency in recruitment, SEBI has directed MIIs to invite applications for ED positions through open advertisements. Applicants are required to have relevant qualifications and experience, and MIIs must submit at least two proposed names for each ED position to SEBI, along with the suggested compensation package. Any subsequent changes to approved remuneration will require SEBI’s prior approval.
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SEBI has introduced rigorous oversight and performance evaluation mechanisms. The Standing Committee on Technology (SCOT) and the Regulatory Oversight and Risk Management Committees will independently assess the performance of EDs quarterly. Public Interest Directors will oversee annual appraisals, factoring in feedback from both committees and the Managing Director, ensuring a robust accountability framework.
Reporting lines of key management personnel (KMPs) have been realigned. Heads of Department under Vertical 1, including the CTO and CISO, will report to the ED of Vertical 1, while the Compliance Officer and Chief Risk Officer (CRiO) will report to the ED of Vertical 2. The CRiO will also handle technology audits and participate in SCOT meetings, further strengthening risk management and cybersecurity oversight.
SEBI has allowed MIIs a phased implementation approach, with the first ED to be appointed within six months and the second within nine months of the amendment’s enforcement. The reforms are designed to enhance operational efficiency, ensure transparency in leadership appointments, and reinforce investor protection across India’s financial market infrastructure.
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