Sebi board approves removal of fin disincentive for MD, CTO of stock exchanges for tech glitches

Markets regulator Sebi's board on Thursday approved a proposal to remove the imposition of financial disincentives on the Managing Director and Chief Technology Officer of stock exchanges and other market infrastructure Institutions (MIIs) for technical glitches.

Stock exchanges, clearing corporations and depositories collectively constitute MIIs.

"The board was informed that Sebi proposes to remove the Financial Disincentive automatically imposed on MD and CTO of MIIs in the event of technical glitches in the nature of disaster, at MIIs," the regulator said in a statement after its board meeting.

This came after Sebi received recommendations from various advisory committees in this regard and separately MIIs had represented that such disincentives on individuals have hampered attracting and retaining the right talent.

With the objective of providing basic minimum criteria for assessing the performance of MIIs, the Sebi board approved broad minimum parameters to be considered by external evaluators.

The board also approved that such external evaluation would take place once every three years with the first such assessment to be conducted within 12 months from the date of implementation of this mechanism.

To facilitate ease of doing business related to activities of infrastructure investment trusts (InvITs) and real estate investment trusts (REITs), Sebi said that the investment manager of such investment trusts can call a meeting of the unitholders by giving a notice of less than 21 days, subject to the prior consent of the unitholders.

The statement of investor complaints will be placed on a quarterly basis before the board of directors of the investment manager of InvIT or REIT and the trustee.

The timeline for disclosing deviations in the use of proceeds will be aligned with the submission of financial results to the stock exchanges voting thresholds have been clarified, and unitholders will have options for e-voting and attending meetings electronically and records must be maintained electronically with backup and disaster recovery measures in place.

The trading lot for privately placed InvITs has been decided to reduce to Rs 25 lakh, besides, a change in sponsor for an InvIT includes the entry of a new sponsor or exit of an existing one.

The timeline for distribution payments has been revised to five working days from the record date, which is two working days from the declaration date.

To facilitate ease of doing business for foreign portfolio investors (FPIs), the Sebi board approved an exemption for University Funds and University-related Endowments (eligible as Category I FPIs) from additional disclosure requirements.

The conditions included that such funds' India equity assets under management (AUM) must be less than 25 per cent of their global AUM. Further, their global AUM must be more than Rs 10,000 crore and they must provide appropriate tax filings to show they are non-profit and tax-exempt in their home country.

Additionally, the Sebi board has cleared a framework on cybersecurity and cyber resilience framework (CSCRF) for its regulated entities (REs). The framework is based on five cyber resiliency goals, such as anticipate, withstand, contain, recover, and evolve, inspired by CERT-In's Cyber Crisis Management Plan.

The framework has categorised REs into five groups based on operations, clients, trade volume, and assets -- Market Infrastructure Institutions (MIIs), Qualified REs, mid-size REs, small-size REs, and self-certification REs.

Sebi said the new framework will be applicable from January 1, 2025, for six categories of entities where cybersecurity and cyber resilience circular already exists and from April 1, 2025, for all other entities where CSCRF made applicable for the first time.