Sebi proposes easing eligibility norms for MII directors

By ET BureauLast Updated: Sep 10, 2026, 05:57:00 AM IST

Synopsis

The Securities and Exchange Board of India (Sebi) said the current rules have made it difficult for MIIs to find suitable candidates, particularly for public interest direc

Mumbai: India's capital-markets regulator Wednesday proposed easing eligibility norms for directors of market infrastructure institutions (MIIs), such as stock exchanges and depositories, and specifying qualification and experience benchmarks for executives overseeing technology, cybersecurity, compliance and risk mitigation.

The Securities and Exchange Board of India (Sebi) said the current rules have made it difficult for MIIs to find suitable candidates, particularly for public interest director positions.

Sebi proposed changes to the existing rules governing the appointment of directors to the boards of stock exchanges, clearing corporations and depositories.

At present, trading members, clearing members, depository participants and their associates are barred from having representation on the governing boards of MIIs.

A person who is a director in an entity that is itself a trading or clearing member, or has such associates, can also be deemed to be a member and become ineligible.

The regulator said these provisions can have a restrictive impact on large conglomerates and holding companies, where different subsidiaries operate independently and maintain Chinese walls.

"Thus, the director of a company in a conglomerate should not become ineligible as a director in an MII, just because the conglomerate or the holding company has a separate subsidiary in the business of trading member/ clearing member/ depository participant. Therefore, there is a need to review this regulation to encourage flow of expertise/talent into the MIIs," Sebi said in a discussion paper on Wednesday. The regulator has proposed extending an existing exemption to directors of companies with well-diversified shareholding, even where their associates are trading members, clearing members or depository participants.

The regulator has suggested defining well-diversified shareholding as a structure where no shareholder, other than public sector shareholders, individually or together with persons acting in concert, directly or indirectly holds 10% or more stake, control or voting rights.

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