SEBI/HO/MRD/TPD -1/P/CIR/2024/124 — THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

CIRCULAR SEBI/HO/MRD/TPD -1/P/CIR/2024/124 To All Stock Exchanges All Clearing Corporations All Depositories Dear Sir/ Madam, Subject: Ease of Doing Business in the context of Standard Operating Procedure for payment of "Financial Disincentives" by Market Infrastructure Institutions (MIIs) as a result of Technical Glitch Para 9.3 of Chapter 2 of SEBI Master Circular for Stock Exchanges and Clearing Corporations dated October 16, 2023 , and Para 4.70 of SEBI Master Circular for Depositories dated October 06, 2023 , have specified the Standard Operating Procedure (SOP) for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of "Financial Disincentives" thereof . The said SOP , interralia , has provision for automatic trigger of financial disincentive on the MII and individuals i.e. Managing Director (MD) and Chief Technology Officer (CTO) of the MII if predefined criteria in handling of technical glitches are not adhered to. In this regard , SEBI received recommendations/ references to review imposition of Financial Disincentive on individuals from various fora like Committee on "Strengthening Governance of Market Infrastructure Institutions" , Working Group on Ease of Doing Business (EoDB) and Technical Advisory Committee (TAC) of SEBI . Separately, MIIs had also jointly represented that such disincentives on individuals may be reviewed for Ease of Doing Business of MIIs. September 20, 2024 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. Further, the test for ascertaining any individual responsibility for a technical glitch would entail ascertainin