The Securities and Exchange Board of India (SEBI) on Friday relaxed guidelines for penalising top officials, such as managing directors and chief technology officers, of market infrastructure institutions (MIIs) in case of technological glitches. The easing is aimed at boosting the ease of doing business. MIIs include entities such as stock exchanges and depositories.
Currently, the guidelines allow an automatic trigger of a financial disincentive for the institution and the two senior management personnel.
MIIs have been asked to disclose on their websites (and in their respective annual reports) the details of financial disincentive on account of technical glitches.
The circular said the disincentive will now be restricted to MIIs. However, they will also be given a chance to make a submission on the tech glitch before the imposition of the disincentive. These changes have been made considering how the operations of MIIs are now increasingly being driven by systems technology.
“Pursuant to deliberations, it was noted that operations of MIIs are increasingly becoming system driven, with them operating constellation of IT systems (both software and hardware) having dependency on various vendors/ service providers,” the circular said.
It also noted that the test for ascertaining any individual responsibility for a technical glitch would entail ascertaining if there have been any act of omission/commission, including if an MD/CTO did or did not ensure adequate oversight/resources/checks and balances, to prevent such glitch reasonably would require application of mind and assessment. However, SEBI will take action on the individual if there is sufficient evidence.
MIIs have been asked to submit a compliance report within 90 days of occurrence of disaster/business disruption to SEBI providing details of payment of ‘financial disincentives’, including computation of ‘financial disincentives’, as per the standard operating procedure.
From: financialexpress
Financial News
