SEBI Proposes Two Executive Directors for MIIs Governing Boards

Consultation Paper; Dated: 24.06.2025

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing key reforms to enhance the governance and operational frameworks of Market Infrastructure Institutions (MIIs). These institutions—such as stock exchanges, clearing corporations, and depositories—form the backbone of India’s securities markets, and SEBI aims to ensure their governance remains robust, transparent, and accountable.

1. Objective of the Consultation Paper

The consultation paper focuses on strengthening governance norms to enhance the credibility, independence, and effectiveness of MIIs. By refining leadership structures and defining accountability parameters, SEBI seeks to align the functioning of these institutions with global best practices.

2. Key Proposals Outlined in the Paper

SEBI’s consultation paper outlines several significant proposals, including:

2.1 Mandatory Appointment of Executive Directors (EDs)

SEBI proposes that each MII must appoint two Executive Directors (EDs) to its Governing Board. This move is intended to ensure a broader distribution of executive responsibilities and reduce excessive reliance on a single individual such as the Managing Director (MD).

2.2 Defined Roles and Responsibilities for Leadership

To bring greater clarity and accountability, the paper recommends:

• Clearly defining the broad roles and responsibilities of:

1. 1. The Managing Director (MD)
   2. The proposed Executive Directors (EDs)
   3. Select Key Managerial Personnel (KMPs)

• This will ensure each leadership role is well-scoped and avoids overlap or ambiguity in operational decision-making.

2.3 Restrictions on External Directorships

SEBI further proposes the introduction of clear norms for holding directorships in other companies by:

• Managing Directors (MDs)
• Executive Directors (EDs)

The intent is to avoid potential conflicts of interest and ensure full-time commitment to the MII’s functioning.

3. Public Feedback Invited

SEBI has invited public comments and stakeholder suggestions on the proposed governance framework. All inputs must be submitted by July 15, 2025.

4. Conclusion

These proposed reforms are part of SEBI’s continued efforts to reinforce institutional governance, enhance transparency, and build investor confidence in the market infrastructure ecosystem. If implemented, the changes are expected to strengthen the overall accountability and professional management of MIIs in India.

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