The Securities and Exchange Board of India in its Circular dated 7th January 2020 has issued a new framework on system audit for market infrastructure institutions (MIIs), stock exchanges, clearing corporations and depositories, wherein they need to inform about major non-compliances.
Key Highlights from the circular.
- SEBI has advised the marketing infrastructure institutions to conduct an annual system audit as per the prescribed framework and terms of reference and also advised to maintain a list of all the relevant SEBI circulars/ directions/ advice, etc. Pertaining to technology and compliance
- Further, MIIs are advised to submit information with regard to exceptional major or minor non-compliances observed in the system audit and categorically highlight those observations pointed out in the system audit (current and previous) which remain open
- The Annual Audit shall be conducted according to the Norms, terms of reference and guidelines issued by SEBI and an Auditor can perform a maximum of 3 successive audits. However, such auditor will be eligible for re-appointment after a cooling-off period of two years
- The overall timeline from the last date of the audit period till completion of final compliance by MII, including follow-on audit, if any, should not exceed one year.
- The Auditor selection norms has been listed out in this new framework.
- A detailed report with regard to the System Audit shall be submitted to SEBI and it shall include executive summary with details about unit where the audit is conducted and the findings.
Click here to read the Notification.
