SEBI Slashes Stock Exchange Chiefs’ Powers in Major MII Governance Overhaul

India's market watchdog just clipped the wings of exchange bosses—and traders couldn't be happier.

Power Shift in Motion

SEBI's new framework strips exchange chiefs of unilateral decision-making authority, forcing major operational changes through strengthened oversight committees. The move targets Market Infrastructure Institutions' governance structures—direct response to years of regulatory concerns about concentrated power.

Committee Rule Now Reigns

No more solo flights for exchange leadership. Key decisions now require committee approval, creating additional layers of accountability. The changes affect appointment processes, operational policies, and conflict resolution mechanisms—basically everything that keeps exchanges running.

Because nothing says 'healthy markets' like needing three committees to approve what one executive used to decide alone—welcome to regulatory progress, finance-style.

Dual role of EDs: governance and succession planning

These appointments also have the dual function of facilitating succession planning in the entities.

The EDs will report to the MD, while the nomination and remuneration committee will take inputs from the MD and the appropriate committee of the governing board, finalising appraisals of the EDs, whose appointments or removal will mirror the process followed for MDs.

 Gap in MD–KMP hierarchy flagged by SEBI

“Strengthening of governance of MIIs is imperative in the wake of exponential growth of securities markets in recent years,” said SEBI. It pointed out that there was a significant gap in the stature and standing between the MD and key managerial persons of critical operations, while the overall roles and responsibilities of the MD and the specific KMPs are not currently prescribed under the regulations. There are no norms regarding the directorships of the MD in companies other than subsidiaries.

SEBI to set up local offices for stronger regulatory presence

Meanwhile, in order to improve regulatory reach and response, Sebi also plans to establish local offices in state capitals and other major cities in a phased manner.

In the first phase, the major cities where SEBI intends to establish local offices are Chandigarh, Jaipur, Lucknow, Guwahati, Bhubaneswar, Vijayawada, Hyderabad and Bengaluru. Other states and major cities would be considered in subsequent phases.

The proposed setting up of local offices would enable SEBI to enhance its connection with investors, intermediaries and issuers, particularly SMEs, start-ups, REITs, and non-profits, apart from improving its ability to monitor unregulated activities and gather market intelligence at the local level, it said.

Published on September 12, 2025