SEBI updates appeal and penalty review process for MIIs

Circular No. SEBI/HO/MRD/POD-III/CIR/P/2025/112, Dated: 05.08.2025

SEBI Updates Review and Appeal Mechanism for MIIs

SEBI has introduced a revised framework for handling requests related to review, appeal, or waiver of penalties that stem from decisions made by the Member Committee (MC) of Market Infrastructure Institutions (MIIs). This updated approach aims to bring greater transparency, consistency, and accountability in the governance of MIIs, which include stock exchanges, clearing corporations, and depositories.

Internal Committee Actions to Be Reviewed by MC

As per the revised mechanism, any request arising from actions initiated by the Internal Committee of an MII, or decisions taken under a pre-approved policy, shall now be placed before the Member Committee (MC) for further evaluation. This ensures that routine decisions and policies are subject to oversight by a broader, more authoritative body within the MII’s governance framework.

Independent Review for Member Committee Actions

In cases where the original action was taken by the Member Committee itself, SEBI mandates that the review or appeal must be handled by an independent mechanism. This mechanism will be established by the MII’s Governing Board and must comprise Public Interest Directors (PIDs) and/or Independent External Professionals. This structure is intended to ensure fairness and remove any conflicts of interest in self-review scenarios.

Enhancing Accountability and Governance Standards

The revised procedure reflects SEBI’s broader regulatory intent to enhance accountability in the functioning of MIIs and ensure that decisions are reviewed impartially. The inclusion of independent professionals and PIDs in the appellate mechanism provides an added layer of objectivity, further strengthening the overall governance structure of market institutions.

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