RBI Released Framework for SROs in Financial Markets

Current Context: On 19th August 2024, The Reserve Bank of India (RBI) released a framework for the recognition of Self-Regulatory Organisations (SROs) in financial markets.

• This framework aims to enhance the integrity, professionalism, and compliance within the financial markets by setting industry standards and best practices for SROs to follow.
• Here are some key points from the framework:
• Objectives: To develop better industry standards for self-regulation and complement the existing legislative and regulatory framework.
• Eligibility Criteria: Specifies the criteria for entities seeking recognition as SROs, including governance standards and membership requirements.
• Responsibilities: SROs are expected to proactively develop and ensure adherence to industry standards and best practices by their members.
• This initiative is part of RBI’s broader efforts to promote safe and stable financial markets, facilitating efficient price discovery and risk management.

Question:

1 Which of the following is a requirement for entities seeking recognition as Self-Regulatory Organisations (SROs) under the RBI's framework?

• A) A minimum of 50 years of operation
• B) Compliance with governance standards and membership requirements
• C) A specific focus on international markets
• D) Exclusively operating in rural areas

Answer: B) Compliance with governance standards and membership requirements Explanation: The framework specifies governance standards and membership requirements as part of the eligibility criteria for recognition as an SRO.