Sebi issues guidelines for performance evaluation of market infra institutions

Markets regulator Sebi on Tuesday issued guidelines on the parameters for the performance evaluation of market infrastructure institutions (MIIs), comprising stock exchanges, clearing corporations and depositories by independent external agencies. The guidelines are aimed at ensuring consistency and uniformity for evaluations to be done by independent external agencies.

For performance evaluation criteria, Sebi said the evaluation will be based on seven key criteria - technology resilience (40 per cent), investor education (17 per cent), regulatory compliance (15 per cent), governance practices (8 per cent) and 5 per cent each for adequacy of resources and fair access and treatment to all stakeholders and information disclosure.

MIIs are required to appoint independent external agencies to evaluate their performance every three years. The agencies need to have relevant expertise in the securities market and must receive a "No Objection Certificate" (NOC) from Sebi, the regulator said in a circular.

The first independent evaluation will cover the financial year 2024-25, with the report due by September 30, 2025. Subsequent evaluations will follow every three years.

Sebi said that the Managing Director (MD) and Key Management Personnel (KMP) of market infrastructure institutions will also be evaluated, with a significant portion of their performance review based on regulatory, risk management and compliance outcomes.

The provisions of this circular will come into effect 30 days from its issuance, and MIIs are required to take the necessary steps for the implementation.

The guidelines for independent external evaluation of the performance of MIIs were approved by the Sebi's board in its meeting in June.