SEBI Tightens Governance Framework for Market Infrastructure Institutions

SEBI Revises Governance Norms to Strengthen Market Infrastructure Institutions

The Securities and Exchange Board of India (SEBI) has revised governance norms for Market Infrastructure Institutions (MIIs) to reinforce regulatory oversight, safeguard public interest and enhance operational integrity. The new framework, issued through a circular, will come into force on 20 December 2025 and applies to stock exchanges, clearing corporations and depositories.

Greater Clarity on Senior Management Roles

SEBI’s revised directions clearly define the responsibilities of Executive Directors (EDs) overseeing key operational and regulatory functions. Such EDs will now be mandatory members of the governing board , ensuring that critical decisions are informed by hands-on operational expertise. Their appointment must be conducted through open advertisement , promoting transparency and merit-based selection.

Regulatory Approval and Appointment Safeguards

To strengthen checks and balances, SEBI has mandated that the appointment terms and remuneration of Executive Directors require prior regulatory approval. Any modification in service conditions will need explicit approval from the governing board. MIIs must also submit proposed ED appointments to SEBI at least two months in advance , ensuring seamless leadership transition and regulatory continuity.

Reporting Structure and Performance Oversight

Under the revised structure, Executive Directors will report to the Managing Director , while their performance will be reviewed independently by designated board committees. EDs must submit quarterly reports to the governing board covering their respective domains. Importantly, they may directly escalate urgent or systemic issues to SEBI, strengthening real-time regulatory communication.

Implementation Timeline and Structural Changes

MIIs have been directed to appoint the first Executive Director within six months and the second within nine months from the effective date. Key officials such as the Chief Technology Officer (CTO) and Chief Information Security Officer (CISO) will now report to Executive Directors, streamlining accountability. MIIs must amend byelaws, update internal systems and formally notify market participants of these changes.

Exam Oriented Facts

• MIIs include stock exchanges, clearing corporations and depositories .

• Revised SEBI norms effective from 20 December 2025 .

• Executive Directors must be part of the governing board.

• Amendments approved at SEBI’s September 2025 board meeting .