Also, the regulator explained guidelines for back office vendors, public interest director meetings (PID), establishing standard operating procedures for disciplinary action against Key Management Personnel (KMP), disclosure of agendas and minutes of board meetings, monthly reports by the Compliance Officer and half reports year by the Chief Risk Officer.
The new guidelines will be effective from April 1, the Securities and Exchange Board of India (Sebi) said in a circular.
Under its whistleblower policy, Sebi has asked MII to resolve whistleblower complaints within 60 days of receipt.
The regulator has defined the role of the audit committee in monitoring whistleblower complaints. It is tasked with receiving and investigating such complaints and making appropriate decisions, including recommending further action if necessary.
The Committee is required to submit detailed quarterly reports to the MII Board of Directors, detailing complaints received, actions taken, and outstanding issues. If a decision cannot be reached on a certain matter, it must escalate the problem to the Governing Council for resolution. Regarding RegTech and SupTech, Sebi has asked MII to implement a system that allows members or participants, such as stockbrokers, clearing members, and depository participants, to submit submissions online, reducing reliance on physical documentation. The system should generate alerts and reports to support regulatory objectives.
Also, MII must disclose important information about its members or participants on its website, including details of investor complaints (resolved and pending) during the last three financial years, regulatory actions taken, net worth in the previous financial year, etc. relevant data.
In addition, any significant regulatory violations by members must be shared with other MIIs to ensure transparency and accountability.
To ensure regulatory compliance by back-office vendors or outsourcing agencies appointed by MII and its members or participants, MII shall establish a policy for appointment and monitoring.
The policy should clearly identify the potential risks associated with the vendor or agency and outline measures to mitigate them.
In addition, the policy must specify minimum, qualitative and quantitative standards or thresholds that vendors must meet in order to be designated, including standards for technology vendors.
To improve accountability in the MII, Sebi has asked the Public Interest Director (PID) to meet at least once every six months, with all members required.
The meeting focused on reviewing compliance with Sebi regulations, assessing the functions of critical areas, such as operations, regulatory compliance, risk management, and investor complaints, and assessing the adequacy of financial and human resources for these functions.
In addition, the PID is required to identify potential conflicts of interest and address issues that have a significant market impact.
Sebi asked MII to create internal Standard Operating Procedures (SOP) to take disciplinary action against KMP or non-compliance with the provisions of regulations and internal guidelines. The policy must be approved by the Nomination and Remuneration Committee (NRC) and the MII Board of Directors.
The SOP includes a list of actions that can be taken against KMP for violating any provision, including advice, warning, impact of annual increment or promotion, suspension and termination.
The Compliance Officer is required to report non-compliance and investor complaints on a monthly basis. The report has to be submitted to Sebi within 45 days after the end of the quarter.
In addition, the Chief Risk Officer has been asked to submit a report on overall risk management every half year, and the report must be sent to the regulator within 90 days of the end of the half year.
Sebi has directed MIIs to publicize regulatory, compliance, risk management, and agenda and minutes related to investor complaints on their website.
