Market Infrastructure Institutions (MIIs)

Market Infrastructure Institutions (MIIs)

Part of: GS Prelims and GS-III – Economy

In news 

• The Securities and Exchange Board of India (SEBI) has floated a discussion paper on review of ownership and governance norms to facilitate new entrants to set up stock exchanges and depositories, otherwise called as market infrastructure institutions (MIIs).

Key takeaways

• As per the key proposals, a resident promoter setting up an MII may hold up to 100% shareholding, which will be brought down to not more than either 51% or 26% in 10 years.
• A foreign promoter from Financial Action Task Force (FATF) member jurisdictions setting up an MII may hold up to 49% shareholding, which shall be brought down to not more than either 26% or 15% in 10 years.
• Foreign individuals or entities from other than FATF member jurisdictions may acquire or hold up to 10% in an MII.
• Any person other than the promoter may acquire or hold less than 25% shareholding.
• At least 50% of ownership of the MII may be represented by individuals or entities with experience of five years or more in the areas of capital markets or technology related to financial services.

Important value additions

The Securities and Exchange Board of India (SEBI)

• It is the regulator of the securities and commodity market in India owned by the Government of India. 
• It was established in 1988 and given statutory status through the SEBI Act, 1992. 
• SEBI is responsible to the needs of three groups:
  • Issuers of securities
  • Investors
  • Market intermediaries
• Functions: 
  • Quasi-legislative – drafts regulations 
  • Quasi-judicial – passes rulings and orders 
  • Quasi-executive – conducts investigation and enforcement action 
• Powers:
  • To approve by−laws of Securities exchanges.
  • To require the Securities exchange to amend their by−laws.
  • Inspect the books of accounts and call for periodical returns from recognised Securities exchanges.
  • Inspect the books of accounts of financial intermediaries.
  • Compel certain companies to list their shares in one or more Securities exchanges.
  • Registration of Brokers and sub-brokers

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