SEBI Introduced Financial Disincentives Framework for MIIs

June 08, 2024
Current Context: The Securities and Exchange Board of India (SEBI) introduced a new framework to hold Market Infrastructure Institutions (MIIs) accountable for lapses in detecting suspicious activity in the stock market.
SEBI Introduced Financial Disincentives Framework for MIIs
  • Here's a breakdown of the key points:
    • Goal: Improve the integrity and safety of the Indian stock market by incentivizing MIIs to be more vigilant.
    • Who it applies to: Stock exchanges, clearing corporations, and depositories (all considered MIIs).
    • What it penalizes: Failures to detect abnormal or suspicious trading activities.
    • When it takes effect: July 1, 2024.
    • Penalties: Financial disincentives (fines) based on MII's annual revenue and the number of offenses within a year. The money goes towards investor protection and education.
    • MII Due Process: MIIs have a chance to explain themselves before a penalty is imposed.

Question:

1 What is the primary goal of SEBI's new framework for Market Infrastructure Institutions (MIIs)?

  • A) Increase trading volume
  • B) Improve the integrity and safety of the Indian stock market
  • C) Reduce transaction fees
  • D) Enhance customer service

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