CIRCULAR
SEBI/HO/MRD/MRD-PoD-3/P/CIR/2025/75 May 26, 2025
To
All Recognized Stock Exchanges
All Recognized Clearing Corporations
All Depositories
Sir/Madam,
Subject:
i. Process for appointment, re-appointment, termination or acceptance of
resignation of specific Key Management Personnel (KMPs) of a Market
Infrastructure Institution (MII); and
ii. Cooling-off period for KMPs of an MII joining a competing MII
iii. Provision relating to re-appointment of Public Interest Directors (PIDs)
A. Process for appointment, re-appointment, termination or acceptance of
resignation of specific KMPs of an MII
1. To strengthen the governance framework of Stock Exchanges, Clearing Corporations
and Depositories (collectively referred as Market Infrastructure Institutions (MIIs)), it is
required that the Key Management Personnel (KMPs) of MIIs in the crucial areas of
operations such as compliance, risk management, technology and information security
are of appropriate stature and independence. These KMPs namely the Compliance
Officer (CO), Chief Risk Officer (CRiO), Chief Technology Officer (CTO) and Chief
Information Security Officer (CISO) are crucial for any MII to deliver on its core public
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interest mandate of giving primacy to compliance, risk management, technological
resilience and market integrity, over commercial considerations.
2. While the Governing Board of the MII sets the overall tone, a culture of prioritizing
efficient discharge of responsibilities towards public interest falling under Verticals 1
and 2, over commercial interest under Vertical 3 must be ingrained at the operating
level as well.
3. Along with having a capable and efficient Managing Director (MD), there is a need
for KMPs of appropriate stature and ability in Vertical 1 and 2 to ensure that the MII
delivers its primary mandate as a public utility infrastructure institution and a first line
regulator.
4. Based on the feedback received from various stakeholders through public
consultation, recommendations of Secondary Market Advisory Committee of SEBI
(SMAC) and approval of the Board, it has been decided that the process for
appointment, re-appointment, termination or acceptance of resignation of specific
KMPs of Verticals 1 & 2 of an MII shall be as under:
4.1. For Appointment: The process for appointment shall be as under:
4.1.1. The MII shall engage an independent external agency to identify and recommend
suitable candidates for appointment as CO, CRiO, CTO and CISO or by whatever
designations called. The Agency shall submit its recommendations to the
Nomination and Remuneration Committee (NRC) of the MII.
4.1.2. The NRC will evaluate the recommendations of the agency and after discussion
with the management of the MII, submit its recommendations for appointment of
such KMPs to the Governing Board of the MII.
4.1.3. The Governing Board shall take the final decision for appointment of such KMPs.
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4.2. For Re-appointment, Termination or acceptance of Resignation: The process
for re-appointment, termination or acceptance of resignation shall be as under:
4.2.1. The NRC shall evaluate the cases of re-appointment, termination or acceptance of
resignation of CO, CRiO, CTO and CISO or by whatever designations called and
after discussion with the management of the MII, submit its recommendations to
the Governing Board of the MII.
4.2.2. The Governing Board shall take the final decision for re-appointment, termination
or acceptance of resignation of such KMPs. Provided that no such KMPs shall be
terminated unless he/she has been given a reasonable opportunity of being heard
by the Governing Board.
4.3. The above provisions will be applicable to all appointments, re-appointments,
terminations or acceptance of resignations on or after the date of implementation of
this circular.
4.4. The appointment, re-appointment, termination or acceptance of resignation of KMPs
other than the MD, CO, CRiO, CTO and CISO shall continue to be with the NRC of
the MII. However, the MIIs are free to implement the above mechanism for all KMPs.
B. Cooling-off period for KMPs of an MII joining a competing MII
5. Based on the feedback received from various stakeholders, recommendations of
SMAC and approval of the Board, the following have been decided:
5.1. The existing requirement for cooling-off period of one year under Securities
Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations,
2018 (SECC Regulations, 2018) and Securities and Exchange Board of India
(Depositories and Participants) Regulations, 2018 (D&P Regulations, 2018) for PIDs
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joining another MII after expiry of terms in one MII have been modified vide Gazette
Notifications No. SEBI/LAD-NRO/GN/2025/246 and No. SEBI/LAD-
NRO/GN/2025/245, dated April 30, 2025 to state that the cooling-off period for Non-
Independent Directors and PIDs shall be as prescribed by the Governing Board of
the MII. The amended provisions will come into force on 90th day from the date of
their publication in the Official Gazette.
5.2. The Governing Board of an MII shall prescribe the mechanism for a cooling-off
period for KMPs (including the MD) of the MII joining a competing MII as a KMP.
5.3. For the purpose of this provision, the expression “competing MII” i.e. “competing
recognised stock exchange or recognised clearing corporation” and “competing
depository” shall be as explained under SECC Regulations, 2018 and D&P
Regulations, 2018 respectively.
C. Re-appointment of PID
6. Based on approval of the Board, it has been decided that in case the existing PID
after completion of his first term is not considered for re-appointment by the
Governing Board of the MII, the rationale for the same shall be recorded and
informed to SEBI.
7. Applicability: The provisions of the circular shall be applicable from the 90th day of
issuance of the circular.
8. All MIIs are advised to:
i. take necessary steps and put in place necessary systems for implementation of
the above.
ii. make necessary amendments to the relevant byelaws, rules and regulations,
wherever required, for the implementation of the above; and.
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iii. bring the provisions of this circular to the notice of the market participants
(including investors) and disseminate the same on their website.
9. This circular is issued in exercise of the powers conferred under section 11(1) of the
Securities and Exchange Board of India Act 1992 read with regulation 51 of the
SECC Regulations, 2018, section 26(3) of the Depositories Act, 1996 and regulation
97 of D&P Regulations, 2018 to protect the interests of investors in securities and to
promote the development of, and to regulate the securities market.
10. This circular is available on SEBI website at www.sebi.gov.in at “Legal Framework -
Circulars.”
Yours faithfully,
Hruda Ranjan Sahoo
Deputy General Manager
Tel no.: 022-26449586
Email: hrsahoo@sebi.gov.in
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