The Securities and Exchange Board of India (Sebi) has proposed changes to the governance framework for market infrastructure institutions (MIIs)—such as stock exchanges and clearing corporations—citing difficulties in finding suitable governing board candidates and a lack of standardized requirements for key managerial positions.
In a consultation paper issued on Wednesday, the market regulator said MIIs are faced with a limited talent pool for directors, making it difficult to appoint public interest directors (PIDs).
Under current regulations, trading members and clearing members are barred from serving on MII governing boards. Similar restrictions prevent depository participants from sitting on the boards of depositories.
The regulator noted that conglomerates and holding companies may have several subsidiaries separated by strict internal information barriers (called ‘Chinese walls’ in corporate governance) to prevent operational interference and conflicts of interest.
Under existing rules, however, an individual can be disqualified from serving as an MII director simply because a completely separate subsidiary within their parent group operates as a trading member, clearing member, or depository participant.