TaxTMI 
TaxTMI 
Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2023
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....g Corporations) Regulations, 2018,- I. in regulation 2, in sub-regulation (1), i. Clause (j) shall be substituted with the following, namely,- "(j) "key management personnel" shall include: i. any person appointed as the managing director or executive director; or ii. a person serving as the head of a department or vertical and directly reporting to the managing director or to the directors on the governing board of the recognised stock exchange or recognised clearing corporation; or iii. a person serving as the head of a core function as specified under Part-C of Schedule-II of these regulations.; or iv. a person who stands higher in hierarchy to the head of any department(s) handling core function(s) in the recognised stock exchange or recognised clearing corporation; or v. reporting officials of key management personnel; or vi. any person defined as a "key managerial personnel" under the Companies Act, 2013; or vii. any other person who is a key decision making authority at the level of the recognised stock exchange or recognised clearing corporation or it....
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....ation shall comprise of at least one public interest director having the requisite qualification and experience in each of the areas of capital markets, finance and accountancy, legal and regulatory practice, and technology. (b) The recognised stock exchange and recognised clearing corporation may also appoint directors having qualification and experience in other areas which may be specific to them: Provided that the recognised stock exchange and recognised clearing corporation shall ensure that the governing board collectively comprises of directors with qualifications and experience as specified at clause (a) above." IV. after regulation 23 and before regulation 24, the following regulation shall be inserted, namely,- "Nominees of the Board on the governing board of a recognised stock exchange and recognised clearing corporation. 23A. The Board may appoint one or more persons not exceeding three in number, as director(s) on the governing board of any recognised stock exchange or recognised clearing corporation and such director(s) shall enjoy the same status and power as the other directors of t....
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.... priority in terms of resource allocation by the recognised stock exchange and recognised clearing corporation over the functions under the vertical as provided at clause (c) of sub-regulation (1). (4) Every recognised stock exchange and recognised clearing corporation shall periodically and objectively assess the adequacy of resources allocated to the first two verticals as specified in sub-regulation (1). (5) Every recognised stock exchange and recognised clearing corporation shall adopt a "Chinese Wall" policy which separates the functions under vertical as provided at clause (b) of sub-regulation (1) from the functions of other verticals. (6) The employees referred to in sub-regulation (5) shall not communicate any information concerning their activity to any one in other verticals and may be physically segregated from employees in other verticals including with respect to access controls: Provided that in exceptional circumstances, employees from other verticals may be given confidential information on "need to know" basis, under intimation to the compliance officer." IX. in regulati....
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....bsp;Board on a half-yearly basis." XIII. in regulation 33, after sub-regulation (4), the following sub-regulations shall be inserted, namely,- "(5) Every recognised stock exchange and recognised clearing corporation shall internally conduct annual evaluation of its performance and the performance of its statutory committees in such a manner as may be specified by the Board. (6) Every recognised stock exchange and recognised clearing corporation shall also appoint an independent external agency to evaluate its performance and the performance of its statutory committees within such periodicity and in such a manner as may be specified by the Board. (7) Every recognised stock exchange and recognised clearing corporation shall disclose, on their website, the agenda and minutes of its governing board meetings pertaining to regulatory, compliance, risk management and investor grievance areas, after approval of such minutes. (8) If any director or key management personnel is or becomes aware of any act of wrongdoing at the recognised stock exchange or recognised clearing corporation and fails to report about it....
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....(ii) governing body; (iii) any standing committee or committees of the governing body or of the general body of members. (b) Register of members showing their full names and addresses and where any member of the stock exchange is a firm, full names and addresses of all partners. (c) Register of authorised clerks. (d) Register of remisiers of authorised assistants. (e) Record of security deposits. (f) Margin deposits book. (g) Ledgers. (h) Journals. (i) Cash book. (j) Bank pass-book. (k) Such other books of accounts and documents as may be specified by the Board from time to time." XVII. in regulation 49, i. the heading shall be substituted with the following, namely,- "Power to issue directions and levy penalty." ii. The existing regulation shall be re-numbered as sub-regulation (1) and after the renumbered regulation, the following shall be inserted, namely,- "(2) The Board may take action against a recognised stock exchange or recognised clearing corporation, director, committee member, key management person....
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....bsp;made as a result of the default; (b) the amount of loss caused to the recognised stock exchange or recognised clearing corporation or the securities market as a result of the default; and (c) the repetitive nature of the default." XVIII. after regulation 50 and before regulation 51 the following regulation shall be inserted, namely "Power to relax the strict enforcement of the regulations. 50A (1) The Board may suo motu or upon an application made by a recognised stock exchange or recognised clearing corporation, for reasons recorded in writing, grant relaxation from the strict compliance of any of the provisions of these regulations subject to such conditions as the Board deems fit to impose in the interests of investors in securities and the securities market, if the Board is satisfied that: (a) the non-compliance is caused due to factors beyond the control of the entity; or (b) the requirement is procedural or technical in nature. (2) The recognised stock exchange or recognised clearing corporation making an application referred to under sub-regulation (1) shall pay a non-re....
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....regulatory, risk management and compliance aspects to business and support teams (l) be responsible for the acts or omissions of its employees in respect of the conduct of its business. (m) monitor the compliance of the rules and regulations by the members and shall further ensure that their conduct is in a manner that will safeguard the interest of investors and the securities market. Part-B [See regulation 26(1)] Code of Conduct for governing board, directors, committee members and key management personnel I. Governing Board The governing board of the recognised stock exchange and recognised clearing corporation shall a) evaluate profitability margins of the stock exchanges or clearing corporations. b) ensure adequacy of resource allocation (both financial and human) towards regulatory compliances. c) focus on strategy, policy level issues and important matters and may review the day-to-day operational matters only in exceptional cases. d) oversee the critical operations including technology as well as the regulatory, risk management, compliance and investor g....
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....bsp;management and compliance outcomes. k) ensure a culture of effective communication and challenge (i.e., encourage alternate views or questions from individuals and groups) and value and respect it. l) ensure that any new product, service, revenue stream is examined by the concerned department of the stock exchange or clearing corporation from the compliance and risk management perspectives in addition to normal viability issues before approving the same. m) review periodically all existing products, services and revenue streams. n) shall meet, without the presence of the managing director and any other executive director, the chief regulatory officer or compliance officer, the chief risk officer, the chief information security officer, the statutory auditor of the stock exchange and clearing corporation and any other person as determined by the public interest directors and non-independent directors to discuss important issues concerning the stock exchange and clearing corporation, on a periodic basis as specified by the Board. o) periodically review the frequency of meetings and agenda items o....
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....gains; (d) maintain the highest standards of personal integrity, truthfulness, honesty and fortitude in discharge of their duties in order to inspire public confidence and not engage in acts discreditable to their responsibilities; (e) perform their duties in an independent and objective manner and avoid activities that may impair, or may appear to impair, their independence or objectivity or official duties; (f) perform their duties with a positive attitude and constructively support open communication, creativity, dedication, and compassion; (g) not engage in any act involving moral turpitude, dishonesty, fraud, deceit, or misrepresentation or any other act prejudicial to the administration of the stock exchanges and clearing corporations; (h) promote greater awareness and understanding of ethical responsibilities; (i) in the conduct of their business, observe high standards of commercial honour and; just and equitable principles of trade; (j) be exemplary in their conduct in business life which may set a standard for others; (k) not use their position to give or receive fav....
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....ement personnel, directly or through his family exceeds 5 percent in any listed company or in other entities related to the securities markets; (c) any other business interests. 4. Access to Information. (a) There shall be prescribed channels through which information shall move and further there shall be audit trail of the same. Any retrieval of confidential documents or information shall be properly recorded. (b) All such information, especially which is non-public and price sensitive, shall be kept confidential and not be used for any personal consideration or gain. (c) Any information relating to the business or operations of the stock exchange or clearing corporation, which may come to the knowledge of directors or committee members or key management personnel during performance of their duties shall be held in strict confidence, shall not be divulged to any third party and shall not be used in any manner except for the performance of their duties. (d) Directors shall call for information only as part of specific committees or as may be authorised by the governing board of s....
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....l abstain from influencing the employees of the stock exchange and clearing corporations in conducting their day to day activities. (c) The directors and committee members shall not be directly involved in the function of appointment and promotion of employees unless specifically so decided by the governing board of stock exchange and clearing corporation. 3. Avoidance of Conflict of Interest. (a) No director or committee member of the stock exchange or clearing corporation shall participate in any decision making or adjudication in respect of any person or matter in which he or she is in any way, directly or indirectly, concerned or interested. (b) Conflict of interest in a matter, if any, shall be decided by the governing board of the stock exchange and clearing corporation. 4. Strategic Planning. Every director and committee member of the recognised stock exchange and recognised clearing corporation shall- (a) participate in the formulation and execution of strategies in the best interest of the stock exchange and clearing corporation and contribute towards pro-active decision ....
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.... specified by the Board from time to time. (c) Public interest directors shall identify important issues which may involve conflict of interest for the stock exchange and clearing corporation or may have significant impact on the functioning of the stock exchange and clearing corporation or may not be in the interest of securities market. The same shall be reported to the Board in a time bound manner. (d) Public interest directors shall have regular oversight on observations of Board's inspection particularly on issues of governance standards, technology and cyber security and system audit and cyber security audit observations. (e) Public interest directors should be proactive in identifying any issues concerning functioning of stock exchange or clearing corporations and report the same to the Board. Public interest directors should ensure all regulatory communication/letter from the Board are placed before the governing board with comments/report of managing director. (f) Public interest directors shall put in place an evaluation mechanism to assess the performance of managing directors on a continuin....
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....ised stock exchanges the core and critical functions shall include but not limited to: a. Vertical 1: Critical operations i. Provision and operation of trading facilities; ii. Record keeping and disclosure of trade related information; iii. IT infrastructure for core and critical functions; iv. Business continuity plan and disaster recovery operations; v. Cyber security and cyber resilience framework. b. Vertical 2: Regulatory, compliance, risk management and investor grievances i. Risk management; ii. Surveillance and investigation; iii. Listing; iv. Member registration; v. Compliance; vi. Inspection; vii. Enforcement; viii. Arbitration and grievance redressal mechanism; ix. Member default; x. Investor protection and services. c. Vertical 3: Other functions including business development i. Sales; ii. Marketing; iii. Product development; iv. Finance; 2. For recognised clearing corporation the core and critical functions shall include but not limited to: a. Vertica....
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....ll be omitted. (d) sub-clause (3) may be substituted with the following, namely,- "(3) Public interest directors shall peruse the relevant laws, code of conduct, etc. and submit an undertaking to the recognised stock exchange or recognised clearing corporation that they are aware of their role, responsibilities and obligations." (e) sub-clause (4), shall be substituted with the following, namely,- "(4) In case of reappointment of the public interest director, the recognised stock exchange or recognised clearing corporation shall apply to the Board four months before the expiry of the term. In addition to the other requirements specified herein, the application for reappointment of the public interest director shall be accompanied with, their attendance details on meetings of various mandatory committees and on the governing board of the recognised stock exchange or recognised clearing corporation, performance review and the reasons for extension of term." (f) sub-clause (5) shall be substituted with the following, namely,- "(5) The existing public interest director, may continue holdi....