SEBI mandates joint inspections by MIIs to ease compliance for brokers and DPs

Circular No. SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/113, Dated: 07.08.2025

SEBI Introduces Joint Annual Inspections for MIIs

The Securities and Exchange Board of India (SEBI) has issued a directive requiring all Market Infrastructure Institutions (MIIs) — including Stock Exchanges, Depositories, and Clearing Corporations — to conduct joint annual inspections of brokers and Depository Participants (DPs). This initiative replaces the practice of each MII conducting separate inspections, which often led to repetitive disruptions for market intermediaries.

Objective: Reducing Disruptions and Improving Efficiency

By mandating joint inspections, SEBI aims to streamline the compliance process and minimize operational interruptions for brokers and DPs. Instead of facing multiple inspection visits from different MIIs, entities will now be subject to a single, coordinated inspection. This approach is expected to ease the compliance burden and ensure a more efficient evaluation process.

Process for Selection of Entities

The regulator has also laid down provisions for the selection of brokers and DPs to be inspected each year. The selection process will ensure transparency, fairness, and risk-based prioritization so that inspections focus on areas of greater regulatory concern.

SOP Implementation Timeline

To facilitate this change, SEBI has instructed MIIs to jointly develop and finalize a Standard Operating Procedure (SOP) that will govern the inspection process. The SOP must be completed and implemented by November 1, 2025. This framework will detail the coordination mechanism, inspection methodology, and reporting format for joint inspections.

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