Sebi proposes relaxing director eligibility rules for Indian stock exchange regulators
The Securities and Exchange Board of India aims to fix hiring difficulties by allowing directors with ties to other subsidiaries on its boards.
India's capital markets regulator, the Securities and Exchange Board of India (Sebi), announced plans to modify rules governing the appointment of directors at market infrastructure institutions. These institutions include stock exchanges and depositories. Current regulations currently prohibit trading members, clearing members, depository participants, and their associates from serving on the boards of these organizations. A person serving as a director in an entity that is itself a trading or clearing member, or holds such associates, faces immediate ineligibility for MII board positions. Sebi argues this framework creates significant challenges for finding qualified candidates, particularly for roles involving public interest, technology, cybersecurity, and risk mitigation. The regulator noted these restrictions disproportionately affect large conglomerates and holding companies, which often operate multiple subsidiaries with independent trading or clearing arms. Under Chinese walls within such groups, a director might belong to one subsidiary operating in the finance sector while holding another subsidiary that functions as a trading member. Consequently, the individual could be barred from serving on the board of an exchange or depository solely based on their affiliation with the conglomerate's other entities. The regulator contends this regulation has a restrictive impact on large groups.
