Sebi chief urges public interest directors to maintain integrity of governance at MIIs

Markets regulator Sebi chairman Tuhin Kanta Pandey on Wednesday called on public interest directors (PIDs) to ensure that the perspective of “public interest” remains central to all major decisions taken by the boards of directors of market infrastructure institutions (MIIs).

Speaking at the Public Interest Directors Conclave 2025, Pandey emphasized that MIIs must ensure that all interventions made by PIDs during board meetings are properly recorded.

Describing PIDs as “guardians of trust” within the MII ecosystem, he said: “Your role is fiduciary, moral and institutional. You are not just there to tick a box for compliance”.

The Sebi chief urged the PIDs to exercise their independence while assessing the adequacy of financial and human resources for functions falling under vertical sectors 1 and 2. He advised them to hold separate meetings without management or key management personnel (KMPs) to discuss critical governance and operational issues.

As per Sebi’s framework, vertical 1 includes critical activities while vertical 2 covers regulatory, compliance, risk management and investor complaints functions.

Pandey also called on the PIDs to exercise independent judgment in the board’s deliberations and proactively highlight any risks they identify. “Strengthen the checks and balances that strengthen the governance culture of your institution,” he said. As markets grow, the role of PIDs will become even more challenging. The Sebi chief urged PIDs to “balance the legitimate expectations of shareholders with the non-negotiable public purpose of your institution. For this, you need to ensure that ethical governance is deeply entrenched in the DNA of your MII”. He further emphasized the need for PIDs to ensure that MIIs have robust internal controls, standard operating procedures (SOPs) and documentation to manage technology risks. Such frameworks, he said, could be developed in consultation with the Industry Standards Forum to ensure uniformity across MIIs.

Underlining Sebi’s efforts to empower PIDs, Pandey said the regulator has already implemented several measures to ease appointment and operational processes. For example, the mandatory cooling-off period for a PID transferring from one MII to another competing MII has been abolished, leaving the decision to the discretion of individual MIIs.

In addition, Sebi has introduced skill assessment metrics for assessing applications for appointment or reappointment of PIDs.