The recent Corrigendum to SEBI’s Circular dated September 20, 2024, offers amendments to the Standard Operating Procedures (SOPs) related to the payment of financial disincentives by MIIs due to technical glitches.
Key Amendments to the SEBI Circular
The amendments outlined in the corrigendum primarily focus on establishing clear references to specific paragraphs in the Master Circular for Commodity Derivatives. This ensures that all Market Infrastructure Institutions, especially those in the commodity derivatives segment, comply with updated SOPs when facing technical glitches.
These updates emphasize the importance of cross-referencing between various circulars and amendments, ensuring clarity and seamless execution of regulatory obligations across different segments.
Clarification Regarding Technical Glitches
In addition to these changes, the corrigendum adds important guidelines related to the management of technical glitches. These include:
Internal Accountability for Technical Glitches
SEBI will now provide MIIs an opportunity to submit their perspective when a technical glitch results in financial disincentives. This ensures a fair and transparent evaluation process.
MIIs must conduct their internal examinations to determine individual accountability for technical glitches. This examination should lead to appropriate actions, including reflecting the findings in the performance appraisals of responsible individuals.
Enforcement Actions
SEBI reserves the right to take enforcement actions against individuals within MIIs if evidence points toward negligence or deliberate mishandling of the systems leading to technical glitches.
These provisions enhance the responsibility placed on MIIs and their personnel to ensure that systems are robust, reducing the occurrence of technical glitches and ensuring efficient operation of the market infrastructure.
Impact on Commodity Derivatives Exchanges
This corrigendum is particularly relevant for Commodity Derivatives Exchanges and Clearing Corporations. The explicit inclusion of references to the Master Circular from August 2023 ensures that these institutions are fully aligned with the broader regulatory framework applicable to all MIIs. The inclusion of Annexure-ZF and specific clauses also adds a layer of operational clarity for these exchanges, ensuring that the process of dealing with technical glitches is well-documented and uniformly applied.
