New Delhi: The chairman of the markets regulator Sebi, Tuhin Kanta Pandey, urged public interest directors (PIDs) on Wednesday to prioritize the ‘public interest’ perspective in all significant decisions made by the governing boards of market infrastructure institutions (MIIs). Addressing the Public Interest Directors Conclave 2025, Pandey stressed the importance of accurately documenting all interventions made by PIDs during board meetings. He characterized PIDs as ‘custodians of trust’ within the MII ecosystem, stating: “Your role is fiduciary, moral, and institutional. You are not there merely to tick a compliance checkbox.” He encouraged PIDs to exercise their independence when evaluating the adequacy of financial and human resources for functions under verticals 1 and 2.
He recommended that they hold separate meetings without management or key managerial personnel (KMPs) to discuss important governance and operational matters. In Sebi’s framework, vertical 1 pertains to critical operations, while vertical 2 encompasses regulatory, compliance, risk management, and investor grievance functions. Pandey also urged PIDs to contribute independent judgment to board discussions and proactively identify any risks. “Reinforce the checks and balances that strengthen your institution’s governance culture,” he remarked. As market dynamics evolve, PIDs will face increasing challenges. The Sebi chairman called on PIDs to “balance the legitimate expectations of shareholders with the non-negotiable public purpose of your institution.
For this, you must ensure that ethical governance is deeply embedded into the very DNA of your MII.” He further highlighted the necessity for PIDs to ensure MIIs maintain strong internal controls, standard operating procedures (SOPs), and documentation to manage technology risks. Such frameworks could be developed in collaboration with the Industry Standards Forum to promote uniformity across MIIs. Highlighting Sebi’s initiatives to empower PIDs, Pandey noted that the regulator has already implemented various measures to simplify appointment and operational processes. For example, the mandatory cooling-off period for a PID transitioning from one MII to a competing one has been eliminated, leaving the choice to individual MIIs.
Additionally, Sebi has introduced skill evaluation metrics for assessing applications for the appointment or reappointment of PIDs.
