Schedule - II (Part - A) - Code of Conduct for Stock Exchanges and Clearing Corporations - Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018

SCHEDULE - II 1 [ Part-A [See regulation 10A] Code of Conduct for Stock Exchanges and Clearing Corporations A recognised stock exchange and a recognised clearing corporation shall: (a) always abide by the provisions of the Act, Securities and Exchange Board of India Act, 1992, any Rules or Regulations framed thereunder, circulars, guidelines and any other directions issued by the Board from time to time. (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 transparent manner. (f) promptly inform the Board of violations of the provisions of the Act, Securities and Exchange Board of India Act, 1992, rules, regulations, circulars, guidelines or any other directions by any of its members or issuer. (g) take a proactive and responsible attitude towards safeguarding the interests of investors, integrity of stock exchange s or clearing corporation s systems and the securities market. (h) endeavor for introduction of best business practices amongst itself and its members. (i) act in utmost good faith and shall avoid conflict of interest in the conduct of its functions. (j) not indulge in unfair competition, which is likely to harm the interests of any other stock exchange or clearing corporation, their members or investors or is likely to place them in a disadvantageous position while competing for or executing any assignment. (k) Segregate roles and responsibilities of key management personnel within the stock exchange and clearing corporation including i. Clearly mapping legal and regulatory duties to the concerned position ii. Defining delegation of powers to each position iii. Assigning 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. ] *************** NOTES:- 1. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, PART - A [See regulation 26(1)] Code of conduct for the directors on the governing board 1. Meetings and minutes. Every director of the recognised stock exchange and recognised clearing corporation 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) offer their comments on the draft minutes and ensure that the same are incorporated in the final minutes; (d) insist on the minutes of the previous meeting being placed for approval in subsequent meeting; (e) endeavour to have the date of next meeting fixed at each governing board meeting in consultation with other members of the governing board; (f) endeavour to ensure that in case all the items of the agenda of a meeting were not covered for want of time, the next meeting is held within fifteen days for considering the remaining items. 2. Code of Conduct for the public interest directors. (a) In addition to the conditions stated in Para (i) above, public interest directors of the recognised stock exchange or recognised clearing corporation shall, endeavour 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 per cent. of the total meetings of the governing board in a calendar year. (b) Public interest directors shall meet separately, at least once in six months to exchange views on critical issues. (c) The public interest directors shall identify important issues which may involve conflict of interest for the stock exchange/ clearing corporation, or may have significant impact on the functioning of recognised stock exchange or recognised clearing corporation, or may not be in the interest of securities market. The same shall be reported to the Board. 3. Strategic planning. Every director 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 recognised stock exchange or recognised clearing corporation and contribute towards pro-active decision making at the governing board level; (b) give benefit of their experience and expertise to the recognised stock exchange or recognised clearing corporation and provide assistance in strategic planning and execution of decisions. 4. Regulatory compliances. Every director of the recognised stock exchange and recognised clearing corporation shall- (a) ensure that the recognised stock exchange or recognised clearing corporation abides by all the applicable provisions of the Securities and Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996, rules and regulations framed thereunder and the circulars, directions issued by the Board from time to time; (b) ensure compliance at all levels so that the regulatory system does not suffer any breaches; (c) ensure that the recognised stock exchange or recognised clearing corporation takes steps commensurate to honour the time limit stipulated by Board for corrective action; (d) not support any decision in the meeting of the governing board which may adversely affect the interest of investors and shall report forthwith any such decision to the Board. 5. General responsibility. Every director of the recognised stock exchange and recognised clearing corporation shall- (a) place priority for redressing investor grievances and encouraging fair trade practice so that the recognised stock exchange or recognised clearing corporation becomes an engine for the growth of the securities market; (b) endeavour to analyse and administer the recognised stock exchange or recognised clearing corporation issues with professional competence, fairness, impartiality, efficiency and effectiveness; (c) submit the necessary disclosures/statement of holdings/dealings in securities as required by the recognised stock exchange or recognised clearing corporation from time to time as per their Rules or Articles of Association; (d) unless otherwise required by law, maintain confidentiality and shall not divulge/disclose any information obtained in the discharge of their duty and no such information shall be used for personal gains; (e) maintain the highest standards of personal integrity, truthfulness, honesty and fortitude in discharge of their duties in order to inspire public confidence and shall not engage in acts discreditable to their responsibilities; (f) 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; (g) perform their duties with a positive attitude and constructively support open communication, creativity, dedication, and compassion; (h) not engage in any act involving moral turpitude, dishonesty, fraud, deceit, or misrepresentation or any other act prejudicial to the administration of the recognised stock exchange or recognised clearing corporation.