SEBI Introduced Financial Disincentives Framework for MIIs

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.

• 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

Answer: B) Improve the integrity and safety of the Indian stock market by incentivizing MIIs to be more vigilant.