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TMI BlogSecurities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2023X X X X Extracts X X X X X X X X Extracts X X X X ..... k Exchanges and Clearing 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 its direct or indirect material subsidiaries, as identified by the mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the governing board. V. in regulation 24, i. in sub-regulation (1) and sub-regulation (6) the words shareholder directors shall be substituted with the words and symbol non-independent directors . ii. in sub-regulation (2), the words nominated by shall be substituted with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 regulation 29, i. in sub-regulation (1), the word and shall be substituted with the symbol , and after the words and symbol sub-regulation (3) , the words and symbol and sub-regulation 3A shall be inserted. ii. in sub-regulation (2), after the words and symbol fund committee; the word and shall be inserted. iii. in sub-regulation (2), clause (b) shall be omitted. iv. in sub-regulation (3), clause (b) shall be omitted. v. after sub-regulation (3), the following sub-regulation shall be inserted, namely,- (3A) Investment Committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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 to its governing board or to the Board, such a person may be liable for action under these regulations, after providing him a reasonable opportunity of being heard. XIV. in regulation 38, i. after sub-regulation (2), the following sub-regulations shall be inserted, namely,- (3) An employee of a recognised stock exchange or recognised clearing corporation shall not simultaneously be an employee of any other company where the recognised stock exchange or recognised clearing corporation has invested. (4) A director, committee member or employee of a recognised stock exchange or a recognised clearing corporation shall not receive any compensation or any other financial benefit from the companies where the recognised stock exchange or recognised clearing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst a recognised stock exchange or recognised clearing corporation, director, committee member, key management personnel, employee or any other person associated with the recognised stock exchange or recognised clearing corporation, for any contravention or abetting the contravention of these regulations, including the Code of Conduct specified under these regulations, the provisions of the Act, the Securities and Exchange Board of India Act, 1992, any rules or regulations framed thereunder and any circulars or directions issued by the Board, either upon a reference or suo motu, as it deems fit, including but not limited to any or all of the following: (a) debarring a recognised stock exchange or recognised clearing corporation from introducing new products and services and restricting its existing activities, products and services. (b) imposing such monetary penalty as may be determined by the Board, on the recognised stock exchange or recognised clearing corporation, directors, committee members, key management personnel, employees or any other person associated with the recognised stock exchange or recognised clearing corporation. (c) restricting any such person to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment using the SEBI payment gateway or any other mode as may be specified by the Board from time to time. XIX. in Schedule II, i. Part-A and Part-B shall be substituted with the following, namely,- 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 proacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the policy contains the following:- i. role of risk appetite in key processes ii. clear quantitative metrics and thresholds to monitor performance of the stock exchange s or clearing corporation 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. g) 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 appetite metrics and thresholds periodically. h) ensure adequate independence of key functions such as regulatory and control functions (risk management, compliance and audit functions) such that; i. regulatory and control functions have sufficient stature to perform their tasks effectively. ii. regulatory and control functions operate independently and have appropriate direct access to the governing board of the stock exchange and clearing corporation and senior management. iii. control functions are proactively involved in all relevant decisions and activities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. t) communicate the guiding principles for institution s target regulatory, compliance, risk and conduct culture. u) endeavor that the stock exchange and clearing corporation 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 iv. performance management mechanisms which take into account adherence to culture, conduct and behavior related dimensions. II. Code of Conduct for directors, committee members and key management personnel A. Applicable to directors, committee members and key management personnel of stock exchange and clearing corporation: 1. General Responsibility. Every director, committee members and key management personnel of the recognised stock exchanges or recognised clearing corporations shall (a) analyse and administer the stock exchanges and clearing corporations issues with professional competence, fairness, impartiality, efficiency and effectiveness; (b) submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he policy issued by the Board shall prevail. 2. Regulatory Compliances. Every director, committee member and key management personnel of the recognised stock exchange or recognised clearing corporation shall (a) ensure that the stock exchange or clearing corporation abides by all the applicable provisions of the Act, the Securities and Exchange Board of India Act, 1992, rules and regulations framed thereunder and the circulars, directions or any other instructions 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 stock exchange or clearing corporation takes steps commensurate to honour the time limit stipulated by Board for corrective action. 3. Disclosures of Beneficial Interest. All directors, committee members and key management personnel shall disclose to the governing board of recognised stock exchange or recognised clearing corporation, upon assuming office and during their tenure in office, whenever the following arises: (a) any fiduciary relationship of self and family members and directorship or partnership of self and family members in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) ensure that all important agendas placed before the governing board of stock exchange and clearing corporation and committees are deliberated in a timely manner; (h) not support any decision in the meeting of the governing board of stock exchange and clearing corporation and the committees respectively which may adversely affect the interest of investors and shall report forthwith any such decision to the Board. 2. Role of the directors and committee members in the day to day functioning of the recognised stock exchange and recognised clearing corporation. (a) The directors and committee members shall not interfere in the day to day functioning of the stock exchange or clearing corporations and shall limit their role to decision making on policy issues and to issues as the governing board of stock exchange and clearing corporation may decide. (b) The directors and committee members shall abstain from influencing the employees of the stock exchange and clearing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 stock exchange and clearing corporations 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 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. Public interest directors shall submit a report of such meeting to the Board and to the governing board of the recognised stock exchange and recognised clearing corporation within the time and manner as may be 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent nature and not speculative in nature. Towards this end, all securities purchased 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 preclearance from the compliance officer to waive this condition after recording in writing his satisfaction in this regard. Explanation. - securities for the purpose of this code shall not include mutual fund units. ii. Part C shall be substituted with the following, namely,- PART C [See Regulation 28(2)] Core functions of recognised stock exchange and recognised clearing corporation 1. For recognised 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 man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall be submitted to the Board for each vacancy of public interest directors, two months before such vacancy. (b) in sub-clause (2), item (a) shall be substituted with the following, namely,- (a) Qualifications as specified in sub-regulation (14) of regulation 23. (c) in sub-clause (2), item (b) shall 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 exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanges and Clearing Corporations) Regulations, 2018 were published in the Gazette of India on 3rd October 2018 vide No. SEBI/LAD-NRO/GN/2018/41. 2. The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 were subsequently amended on (a) 4th June, 2019, by the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2019 vide No. SEBI/LAD-NRO/GN/2019/21. (b) 17th April, 2020, by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2020vide No. SEBI/LAD-NRO/GN/2020/10. (c) 8th October, 2020, by the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2020 vide No. SEBI/LADNRO/GN/2020/32. (d) 23rd March, 2021, by the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2021 vide No. SEBI/LADNRO/ GN/2021/12. (e) 13th August, 2021, by the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Second Amendment) Regulations, 2021 vide No. SEBI/LADNRO/ GN/2021/44. (f) 12th August 2022, by the Securities Contracts (Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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