Sebi chief urges public interest directors to uphold governance integrity at MIIs

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

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

Describing PIDs as “custodians of trust” within the MII ecosystem, he said, “Your role is fiduciary, moral, and institutional. You are not there merely to tick a compliance checkbox”.

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

Under Sebi’s framework, vertical 1 covers critical operations, while vertical 2 relates to regulatory, compliance, risk management, and investor grievance functions.

Pandey also called on PIDs to bring independent judgment to board deliberations and proactively highlight any risks they identify. “Reinforce the checks and balances that strengthen your institution’s governance culture,” he said.As the 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 have to ensure that ethical governance is deeply embedded into the very DNA of your MII”.He further emphasised 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.

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

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