SEBI Grade A Current Affairs — 10 September 2026

SEBI has proposed governance reforms for Market Infrastructure Institutions, including stock exchanges, clearing corporations, and depositories. The consultation paper recommends relaxing director eligibility criteria to expand the candidate pool for MII boards and introducing standardised operating procedures for key management personnel. The proposals aim to strengthen oversight, reduce conflicts of interest, and bring more professional diversity to MII governance structures. Public comments have been invited before these proposals are formalised into regulatory amendments.

Market Infrastructure Institutions are the backbone of India's securities market — stock exchanges like NSE and BSE, clearing corporations, and depositories like CDSL and NSDL. SEBI regulates them under the Securities Contracts (Regulation) Act, 1956 and the SEBI Act, 1992, with specific governance requirements embedded in the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, commonly called SECC Regulations.

The governance architecture of MIIs is uniquely sensitive because these institutions are simultaneously self-regulatory organisations and commercial entities. This dual role creates inherent conflicts of interest — exchanges regulate their own members while competing for their business. SEBI's framework therefore mandates that MII boards have a majority of independent directors, with a Public Interest Director (PID) category designed to represent the broader market.

The current proposal addresses two pressure points. First, the eligibility criteria for directors — especially PIDs — have been seen as too restrictive, limiting the talent pool. Relaxing these rules could bring in domain experts from technology, law, risk management, and academia. Second, the absence of standardised SOPs for key officials like the MD & CEO creates inconsistency in operational accountability.

For exam purposes, understand that SEBI's governance of MIIs is distinct from its governance of listed companies under LODR Regulations. MIIs have their own regulatory track — the SECC Regulations — and the conflict-of-interest architecture, director category definitions, and ownership norms are tested as separate provisions.

Copthall Mauritius Investment Ltd, a JPMorgan affiliate, and Mansi Share and Stock Broking have had their securities market ban lifted by SEBI after depositing the requisite amounts under the Consent and Settlement (CAS) mechanism. The entities were originally barred over alleged index manipulation charges. Market access is restored pending final resolution, but the underlying proceedings are not fully closed. The deposit triggers conditional relief, not an acquittal of the alleged misconduct.

This case illustrates two critical SEBI enforcement tools: interim restraint orders and the Consent and Settlement mechanism.

SEBI has the power under Section 11 and 11B of the SEBI Act, 1992 to pass interim orders restraining entities from accessing securities markets when prima facie evidence of manipulation exists. Index manipulation — artificially influencing benchmark indices through coordinated trades — is treated as a serious market integrity violation under SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (PFUTP).

The Consent and Settlement (CAS) mechanism, governed by SEBI's Circular on Settlement Proceedings, allows entities to settle enforcement actions by depositing specified amounts without admitting or denying guilt. The mechanism is designed to reduce litigation burden and provide faster resolution. Critically, settlement does not equal acquittal — SEBI's findings and the deposited amount signal a quasi-admission of regulatory risk.

For foreign portfolio investors (FPIs) like Copthall, which is registered from Mauritius, SEBI's cross-border enforcement capacity is particularly significant. SEBI's bilateral MoUs with foreign regulators and IOSCO membership enable it to pursue market manipulation cases even where the entity is domiciled abroad.

The restoration of trading access upon deposit — rather than after final adjudication — reflects SEBI's calibrated approach: protect markets through interim bans, then allow conditional re-entry once financial accountability is established.