SEBI circular, issued on September 20, 2024, modifies the “Standard Operating Procedure (SOP)” related to the payment of financial disincentives by Market Infrastructure Institutions (MIIs) for technical glitches. Here are the key changes:
Para 9.3 (Stock Exchanges and Clearing Corporations) and Para 4.70 (Depositories): The SOP still mandates financial disincentives for MIIs in case of system downtimes beyond a predefined threshold. The intent is to ensure MIIs monitor and upgrade systems regularly to minimize disruptions.
Deletion of Financial Penalties on Individuals: Clauses that imposed financial disincentives on MDs and CTOs for technical glitches have been removed. SEBI will now impose financial penalties solely on MIIs
Compliance Reporting: MIIs must submit compliance reports within 90 days of a technical glitch detailing the financial disincentives paid. They are also required to disclose this information on their websites and in annual reports. Listed MIIs must comply with SEBI’s disclosure norms.
Opportunity for MIIs to Respond: Before imposing any financial disincentives, SEBI will allow the MII to submit its case regarding the glitch. Additionally, MIIs must carry out internal reviews of the glitch to assess individual accountability, which may impact the performance appraisals of responsible individuals.
Effective Date: The amendments are effective immediately from the date of the circular’s issuance.
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