TaxTMI 
TaxTMI 
Committees at Market Infrastructure Institutions (MIIs)
X X X X Extracts X X X X
X X X X Extracts X X X X
....rticipants) Regulations, 2018 [SEBI (D&P) Regulations, 2018], were notified on October 3, 2018 and the SECC Regulations, 2012 and SEBI (D&P) Regulations, 1996 were repealed. 3. Given that the scope of work of some of the committees at MIIs were inter-related and overlapping, SEBI Board, in its meeting dated June 21, 2018, inter alia decided to rationalize the constitution of existing regulatory committees at MIIs. 4. Accordingly, in respect of statutory committees at MIIs, the Regulation 29 of SECC Regulations, 2018 & Regulation 30 of SEBI (D&P) Regulations, 2018, reads as under: (1) Every recognised stock exchange / recognized clearing corporation or depositories [as applicable], shall constitute the committees as per sub-regulation (2) and sub-regulation (3). (2) Functional committee, comprising: a. Member selection committee; b. Investor grievance redressal committee; and c. Nomination and remuneration committee. (3) Oversight committees, comprising: a. Standing committee on technology; b. Advisory committee; c. Regulatory oversight committee; and d. Risk management committee. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dhere to the following: a. Over and above the statutory committees mentioned at point 4 above, the committees that are mandated by relevant law for listed companies shall apply mutatis mutandis to MIIs. b. MIIs shall lay down policy for the frequency of meetings, etc., for the statutory committees. c. PIDs in Committees at MIIs: i. SECC Regulations 2018 and SEBI (D&P) Regulations 2018 prescribe that a PID on the board of a MII shall not act simultaneously as a member on more than five committees of that MII. ii. It is clarified that the above limitation on maximum number of committees that a PID can be member of, shall be applicable only to statutory committees prescribed by SEBI under SECC Regulations 2018 and SEBI (D&P) Regulations, 2018, and circulars issued thereunder. The said requirement shall not be applicable to committees constituted under Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements), 2015, amongst others. iii. In case of non-availability of adequate number of PIDs in a MII, the relevant MII shall take steps to induct more PIDs in order to fulfil the requirement of composition of committee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nimum of 25 clearing members. 9. As stated in Regulation 52 (1) of SECC Regulations, 2018, SEBI circular no. CIR/MRD/DSA/33/2012 dated December 13, 2012 and circular no. SEBI/HO/MRD/DSA/CIR/P/2016/30 dated January 22, 2016 stand repealed with the issuance of this circular. Further, following circulars stand partially amended as under: a. Clause 2 & 3 of SEBI circular no. CIR/MRD/DMS/ 03 /2014 dated January 21, 2014 on functions and composition of IT strategy committee of depositories, stands rescinded. b. Clause 3 of SEBI circular no. SEBI/HO/DMS/CIR/P/2017/15 dated February 23, 2017 and Clause no. 2 (B) of SEBI circular no. CIR/CDMRD/DEICE/CIR/P/2017/77 dated July 11, 2017 providing for composition and functions of former committees of MIIs, stands rescinded. c. Clause 5 of SEBI circular no. CIR/MRD/DP/ 1 /2015 dated January 12, 2015 on Risk management policy at depositories may be read as under: " The Depositories shall put in place mechanism to implement the Risk Management Framework through a Risk Management Committee which shall be headed by a Public Interest Director (PID)." Further, the responsibilities of the committee an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... policy, consider the cases of violations observed during inspection, etc. and impose appropriate regulatory measures on the members of the exchange. While imposing the regulatory measure, the Committee shall adopt a laid down process, based on the 'Principles of natural justice'. • Realize all the assets / deposits of the defaulter/expelled member and appropriate the same amongst various dues and claims against the defaulter/ expelled member in accordance with the Rules, Byelaws and Regulations of the Exchange In the event both the clearing member and the constituent trading member are declared defaulter, then the membership selection committee of the stock exchange and that of the clearing corporation shall work together to realise the assets of both the clearing member and the trading member. Admission or rejection of claims of client/trading members/clearing members over the assets of the defaulter/expelled member. • • Recommendation in respect of the claims to the Trustees of the IPF on whether the claim is to be paid out of IPF or otherwise. To oversee contribution towards Core Settlement Guar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....• The disclosures and code of conduct prescribed under para 3.4 and 4 of SEBI circular Ref. No. CIR/MRD/DSA/24/2010 dated August 11, 2010, shall be applicable, as far as may be, to members of IGRC also. • . The Committee shall include only public interest directors. However, independent external persons may be part of the committee for the limited purpose of recommendation relating to selection of Managing Director; wherein the number of PIDS shall not be less than the independent external persons. 3. Nomination & Remuneration Committee 6 Sr no. Name Committee of Brief terms of reference (II) Oversight Committees • Besides the above, it will also discharge the function as Nomination & Remuneration Committee under the Companies Act, 2013 and SEBI (LODR) regulations, 2015 as amended from time to time. Composition 4. Standing Committee on Technology • Monitor whether the technology used remains up to date and meets the growing demands of the markets. • • • • • • • . • 5. Advisor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and surveillance related functions such as monitoring of market through order and trade level alerts, security level alerts, processing of alerts, price band changes, rumour verifications, shifting of securities to trade for trade segment, action against listed companies as a part of Surveillance Action, detailed investigations undertaken, disciplinary actions, etc., as may be applicable to the relevant segments of the exchange Oversee SEBI inspection observations on surveillance related issues and also decisions taken in the periodic surveillance meeting at SEBI. Estimate the adequacy of resources dedicated to trading and surveillance function. Oversee matters related to product design and review the design of the already approved and running contracts. Oversee SEBI inspection observation on Product Design related issues. Estimate the adequacy of resources dedicated to Product design related function. Review the actions taken to implement the suggestions of SEBI's Inspection Reports, place the same before the Governing Board of the stock exchange Composition • • The committee shall comprise of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng director of the exchange. The risk management committee shall monitor implementation of the risk management policy and keep the Board and the governing board informed about its implementation and deviation, if any. Composition • The risk management committee shall comprise only of the public interest directors and independent external persons, and shall report to the Governing Board. • The number of PIDS shall not be less than the total of number of independent external persons. Name Committee 7. Risk Management Committee 10 10 B. Sr no. Mandatory Committees for Clearing Corporations: Name Committee of Brief terms of reference (I) Functional Committees: 1. Membership Selection Committee • Composition To scrutinize, evaluate, accept or reject applications for admission of members and transfer of membership and approve voluntary withdrawal of membership. Also in case of clearing corporations with commodity segment, the committee shall also look into: o Approving enplanement & cancellation of Warehouse Service Providers/Vault Service Providers /A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay down the policy for compensation of key management personnel in terms of the compensation norms prescribed by SEBI. Determining the compensation of KMPS in terms of the compensation policy Determining the tenure of a key management personnel, other than a director, to be posted in a regulatory department. Selecting the Managing Director Framing & reviewing the performance review policy to carry out evaluation of every director's performance, including that of Public Interest Director (PID). Recommending whether to extend the term of appointment of the PID. Besides the above, it will also discharge the function as Nomination & Remuneration Committee under the Companies Composition • • The IGRC shall comprise of a single person for claims up to Rs. 25 Lakh, whereas, for claims above Rs. 25 Lakh, the IGRC shall comprise of three persons The IGRC shall comprise of independent external persons with qualifications in the area of law, finance, accounts, economics, management or administration and experience in financial services, including securities market. The members of IGRC shall not be ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... directors and independent external persons put together. • The Committee shall comprise of clearing members of the clearing corporation. • The chairperson of the governing board shall be the head of the advisory 13 • committee The managing director shall be a permanent invitee to every meeting of the advisory committee. • The number of PIDS shall not be less than the total of number of shareholder directors, and clearing members put together • 6. Regulatory • Oversight Committee • Oversee matters related to member regulation such as admission of members, inspection, disciplinary action, etc. Oversee SEBI inspection observations on membership related issues. • • • • • • • • • Estimate adequacy of resources dedicated to member • regulation Monitor the disclosures made under Reg.35 of SCR(SECC) Regulations, 2018 Review the actions taken to implement the suggestions of SEBI's Inspection Reports and place it before the Board of Clearing Corporation To follow ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the risk management policy and keep the Board and the governing board informed about its implementation and deviation, if any. Composition • The risk management committee shall comprise of the public interest directors and independent external persons, and shall report to the Governing Board. The number of PIDS shall not be less than the number independent external persons. 15 C. Mandatory Committees for Depositories: Sr no. Name of Committee Brief terms of reference Composition 1 (I) FUNCTIONAL COMMITTEES : Member Selection • • 2 Investor Grievance • Redressal Committee To scrutinize, evaluate, accept or reject applications for admission of members, transfer of membership as well as approve voluntary withdrawal of membership. Formulate policy to deal with any disciplinary matters relating to the Participants, Clients, Issuer or its Registrar and Transfer Agent, Clearing Members, Clearing Corporations and other users. This shall include termination / disciplinary action against participants, suspending, expelling or imposing penalty on the par....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erformance review policy to carry out evaluation of every director's performance, including that of Public Interest Director (PID). Recommending whether to extend the term of appointment of the PID. Besides the above, it will also discharge the function as Nomination & Remuneration Committee under the Companies Act, 2013 and SEBI (LODR) regulations, 2015 as amended from time to time. (II) OVERSIGHT COMMITTEES : Standing Committee on Technology • • • • Monitor whether the technology used by the depository remains • up to date and meets the growing demands Monitor the adequacy of system capacity and efficiency Look into the changes being suggested to the existing • software/hardware Investigate into the problems computerised depository system, such as hanging/ slowdown/ breakdown. Composition CIR/MRD/DSA/24/2010 dated August 11, 2010, shall be applicable, as far as may be, to members of IGRC also. • The Committee shall include only public interest directors. • However, independent external persons may be part of the committee for the limited ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er and decide on the criteria for admission, withdrawal of securities and continuous compliance requirements To declare any security admitted into Depository as ineligible To review complaint resolution process and status of redressal of grievances of demat account holders, depository participants, Issuers / RTAs with respect to depository operations. This shall include review of complaints remaining unresolved over long period of time, estimate the adequacy of resources, amongst others. • Annual review of arbitrators and arbitration awards (both quantum and quality of the awards). • • To monitor compliance with SEBI (Depositories and Participants) Regulations, 2018 as amended from time to time and other applicable rules and regulations along-with SEBI Circulars and other directions issued thereunder. To review the fees and charges levied by the Depository. Review the actions taken to implement the suggestions of SEBI's Inspection Reports, place the same before the Governing Board of the depository To follow up and ensure compliance/implementation of the inspection observations Composition â....