TaxTMI 
TaxTMI 
International Financial Services Centres Authority (Market Infrastructure Institutions) (Amendment) Regulations, 2024
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Financial Services Centres Authority (Market Infrastructure Institutions) (Amendment) Regulations, 2024. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In regulation 2 of the principal regulations, in sub-regulation (1), for clause (c), the following clause shall be substituted, namely: - "(c) "clearing corporation" means an entity that is established to undertake the activity of clearing and settlement of trades in securities or other permitted financial products and includes a clearing house; 3. In regulation 2 of the principal regulations, in sub-regulation (1), for clause (j), the following clause shall be substituted, namely: - "(j) "key management personnel" in relation to a recognised market infrastructure institution shall mean and include: i. a person appointed as its managing director or executive director; ii. a person serving as the head of a department or vertical and directly reporting to the managing director or to the directors of its governing board; iii. a person serving as the head of a core function as specified in regulation 27 of these regulations; iv. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion, 'net worth of a clearing corporation' means the aggregate value of its liquid assets calculated in the manner as may be specified by the Authority from time to time. Explanation III- Cash and bank balance, fixed deposits, Government Securities and other instruments as may be specified by the Authority from time to time shall be considered as 'liquid assets' for the purpose of calculation of net worth of a clearing corporation. 11. In regulation 16 of the principal regulations, in sub-regulation (1), for clause (b) and its proviso, the following clause shall be substituted, namely:- "(b) a joint venture of market infrastructure institutions recognised in India, an IFSC or a Foreign Jurisdiction with a minimum of fifty-one per cent. of the paid-up equity share capital of the recognised stock exchange held by such joint venture." 12. In regulation 17 of the principal regulations, in sub-regulation (1), for clause (b) and its proviso, the following clause shall be substituted, namely:- "(b) a joint venture of market infrastructure institutions recognised in India, an IFSC or a Foreign Jurisdiction with a minimum of fifty-one per cent. of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....public interest director(s) may continue in office till the expiry of their current term. 19. In regulation 24 of the principal regulations, after sub-regulation (2), the following sub-regulation shall be inserted, namely:- "(2A) The Authority may appoint not more than three directors on the governing board of a recognised market infrastructure institution, who shall enjoy the same status and powers as the other directors of the governing board." 20. In regulation 24 of the principal regulations, in sub-regulation (2), for clause (i), the following clause shall be substituted, namely:- (i) The appointment of managing director shall be for a term not exceeding five years: "Provided that post the completion of first term, the recognised market infrastructure institution shall conduct the appointment process for appointment of the Managing Director afresh: Provided further that managing director may be appointed by a recognised market infrastructure institution for a maximum period of ten years, subject to maximum age limit of sixty five years" Provided also that, the existing managing director may continue in office till the expiry o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1) A recognised market infrastructure institution shall identify its core and critical functions, and segregate them into the following verticals: a) Vertical 1: Critical Operations; b) Vertical 2: Regulatory, Legal, Compliance, Risk Management and Investor Grievances; c) Vertical 3: Other functions including business development. (2) The functions of the verticals referred under sub-regulation (1) above, are provided at Schedule-II of these regulations. (3) Every market infrastructure institution shall ring-fence the functions and personnel under vertical 2 as referred to in clause (b) of sub-regulation (1) from the other verticals." 25. Title of the regulation 29 of the principal regulations shall be substituted with the following, namely:- "29. Admission of securities or other permitted financial products" 26. In regulation 29 of the principal regulations, after the words "any new category of securities", the words "or other permitted financial products" shall be inserted. 27. In regulation 31 of the principal regulations, in sub-regulation (6), following explanation shall be inserted, namely:- Explanation: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Instruments eligible for dematerialization. - All securities defined under the SCRA and other permitted financial products shall be eligible for being held in dematerialised form in a recognised depository." 34. In regulation 57 of the principal regulations, in sub-regulation (3), for the word "twenty", the word "eight" shall be substituted. 35. In regulation 62 of the principal regulations, for the word "twenty", the word "eight." shall be substituted. 36. After regulation 63 of the principal regulations, the following regulation shall be inserted, namely:- "63A. Chief Risk Officer.- (1) A recognised market infrastructure institution shall appoint a chief risk officer to identify, monitor and initiate necessary steps to mitigate the risk associated with the functioning of a recognised market infrastructure institution. (2) The chief risk officer shall be responsible for the overall risk management of the recognised market infrastructure institution and submit a report to the Authority on a half-yearly basis." "63B. Chief Legal Officer.- (1) A recognised market infrastructure institution, which is not a subsidiary of a market infrastructure inst....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any action taken or purported to have been taken under the circulars mentioned under sub-regulation (6), before the commencement of these amendment regulations shall be deemed to have been done or taken or commenced under the corresponding provisions of these regulations. 38. At the end of the principal regulations, the following shall be inserted as the 'Schedule-I' and 'Schedule-II', namely:- Schedule-I (See regulation 10A) Part A: Code of Conduct for a recognised market infrastructure institution A recognised market infrastructure institution shall: (a) adhereto the provisions of the IFSCA Act, Securities Contracts (Regulations) Act, 1956, Securities and Exchange Board of India Act, 1992, Depositories Act, 1996, including any rules, regulations, circulars, guidelines and any other directions issued thereunder. (b) adopt appropriate due diligence measures. (c) take effective measures to ensure implementation of risk management framework and good governance practices. (d) take appropriate measures towards investor protection and education of investors. (e) treat all its applicants or members in a fair and tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....review the day-to-day operational matters. (e) oversee the critical operations including technology as well as the regulatory, risk management, compliance and investor grievance redressal functions of the market infrastructure institution. (f) take the lead in succession planning for the managing director and other key positions. (g) play an active role in defining, establishing and documenting risk management framework, covering risk appetite or risk tolerance policy of the market infrastructure institution and ensure that the policy contains the following:- i. role of risk appetite in key processes; ii. clear quantitative metrics and thresholds to monitor performance of the market infrastructure institution's risk appetite; iii. acceptability of breaches and trigger response(s), if any; iv. zero tolerance for areas such as cyber security, system stability, surveillance, fair access, fraud or corruption, compliance, etc. (h) make key stakeholders (executive and non-executive) aware of the use and value of risk appetite across the organization (including implications of breaches) and review and approve risk app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ings and agenda items of the governing board and statutory committees to ensure that the number of meetings is rationalized and all important issues are discussed. (q) ensure that the agenda papers are approved by the Chairman of the governing board. (r) ensure that members of the governing board can place agenda item during their meeting. (s) be responsible for monitoring compliance with the code of conduct by the directors of the market infrastructure institution. (t) uphold a strong culture in the market infrastructure institution and promote target culture from the top through behaviour, actions and effective communication. (u) communicate the guiding principles for institution's target regulatory, compliance, risk and conduct culture. (v) endeavor that the market infrastructure institution put in place key elements related to culture such as: i. adequate training programs to help employees better understand expectations of behavior (for example, trainings on dilemmas); ii. mechanisms to measure and track indicators related to culture at regular intervals; iii. accountability mechanisms; and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndors or suppliers of the market infrastructure institution, or any listed company at the stock exchange or any issuer company admitted by the stock exchanges; (l) not commit any act which will put the reputation of the market infrastructure institution in jeopardy; (m) comply with the provisions of all applicable laws pertaining to the securities market; (n) directors and key management personnel shall at all point of time comply with all the internal policies of the market infrastructure institution including their code of conduct. If there is a conflict between the code of conduct policy of the market infrastructure institution with those provided by the Authority, then the policy issued by the Authority shall prevail. 2. Regulatory Compliances Every director, committee member and key management personnel of the recognised market infrastructure institution shall- (a) ensure that the market infrastructure institution abides by all the applicable provisions of the IFSCA Act, Securities Contracts (Regulations) Act, 1956, Securities and Exchange Board of India Act, 1992, including any rules, regulations, circulars, directions or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Meeting and Minutes The directors and committee members of a recognised market infrastructure institution shall- (a) not participate in discussions on any subject matter in which any conflict of interest exists or arises, whether pecuniary or otherwise, and in such cases the same shall be disclosed and recorded in the minutes of the meeting; (b) not encourage the circulation of agenda papers during the meeting, unless circumstances so require; (c) ensure that minutes are recorded to capture all points of opinion comprehensively; (d) offer their comments on the draft minutes and ensure that the same are incorporated in the final minutes; (e) insist on the minutes of the previous meeting being placed for approval in subsequent meeting; (f) endeavor to have the date of next meeting fixed at each governing board meeting and committee meetings respectively in consultation with other respective members of the governing board and committees; (g) endeavor that all important agendas placed before the governing board of stock exchange and clearing corporation and committees are deliberated in a timely manner. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s or dealings in securities in IFSC by the directors and their immediate relatives shall be disclosed to the governing board of the market infrastructure institution. (b) All directors shall also disclose the trading in IFSC conducted by firms or corporate entities in which they hold twenty percent or more beneficial interest or hold a controlling interest, to the market infrastructure institution. (c) The details including time period for disclosures stated above shall be provided by the market infrastructure institution, provided that the time period for disclosure shall not be later than fifteen days of the transaction/ dealing. (d) Directors who are nominees of Government of India, its statutory bodies or Public Financial Institutions and are governed by their own codes shall be exempt from this requirement. C. Applicable to Public Interest Directors (a) Public Interest Directors of the market infrastructure institution shall endeavor to attend all the governing board meetings and they shall be liable to vacate office if they remain absent for three consecutive meetings of the governing board or do not attend seventy-five percent of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nefit. E. Applicable to key management personnel (a) Managing director of the market infrastructure institution shall meet employees without the presence of other key management personnel (the heads of departments) to discuss important issues pertaining to market infrastructure institution. (b) Key management personnel of the market infrastructure institution shall disclose on a periodic basis as determined by the market infrastructure institution (which could be monthly), all their dealings in securities in IFSC, directly or indirectly, to the governing board or regulatory oversight committee or compliance officer of market infrastructure institution. (c) All transactions must be of an investment nature and not speculative in nature. Towards this end, all securities purchased in IFSC must be held for a minimum period of sixty days before they are sold. In specific or exceptional circumstances, however, sale can be effected anytime by obtaining pre-clearance from the compliance officer to waive this condition after recording in writing his satisfaction in this regard. SCHEDULE -II [See Regulation 2 (1) (j) (iii) and 27 (2)] Core function....