Public Interest Directors at MIIs are ‘custodians of trust’, must maintain stability: Sebi’s Tuhin Kanta Pandey

Safety of MIIs must never be overshadowed by commercial interest, says Sebi chief Pandey to Public Interest Directors

Market regulator Sebi’s Chairman Tuhin Kanta Pandey has urged Public Interest Directors (PIDs) of Market Infrastructure Institutions such as stock exchanges, clearing corporations and depositories to ensure robust governance, technology vigilance and ethical stewardship across MIIs.

Chairman Tuhin Kanta Pandey was speaking at the second edition of the PID Conclave 2025 on October 15. Public Interest Directors are similar to independent directors in companies and their appointments are approved by Sebi.

Sebi chairman called upon PIDs of market infrastructure institutions to act as “custodians of trust” and to place public interest at the heart of every decision. “As PIDs, you are the custodians of this trust in the MII ecosystem — in other words, you are SEBI’s eyes and ears. Your role is fiduciary, moral, and institutional. You are not there to merely tick a check box in pursuit of compliance,” said Sebi chairman. He added, “The larger objective of maintaining safety, efficiency, and financial stability in our entire financial sector must never be overshadowed by commercial interests of an MII.”

India’s capital markets have facilitated fund mobilisation of nearly Rs 93 trillion through equity and debt in the past decade, with around Rs 7 trillion raised in just the first half of FY26, underscoring the growing depth. Sebi Chairman highlighted that over 130 million unique investors now participate in the markets, and stock exchanges handle over 15 billion messages daily, peaking at 27 billion.

MIIs will play an increasingly vital role in this regard, as India expands the reach of its securities markets. Tuhin Kanta said as the scale and complexity of the markets grow, PIDs have to move from traditional oversight to strategic stewardship. “Your role will increase in significance and will be under increased scrutiny,” said Sebi chairman.

He also called upon PIDs to exercise their independence while reviewing the adequacy of financial and human resources for functions under the Critical Operations Vertical and the Regulatory, Compliance, Risk Management, and Investor Grievances Vertical. PID meetings, separate from management and KMPs, should have comprehensive discussions on critical issues concerning the MII, said Sebi chairman. Tuhin Kanta also said that PIDs should use the authority vested in them by Sebi and take their own independent judgment while discussing key issues, and “pro-actively bring to Sebi’s notice any risk”. Sebi urged them to “reinforce the checks and balances that strengthen your institution's governance culture.”

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Tuhin Kanta called on PIDs to give high weightage to technology within MIIs, and treat any system failure with the same seriousness as a financial irregularity.

Cautioning on innovation, Pandey said as PIDs should ensure that as MIIs innovate, there is no compromise on systemic stability or data integrity.

He also called upon the directors to develop an understanding of technology. “PIDs can no longer just be governance experts. You must develop a strong understanding of emerging technologies. Please regularly interact with your KMPs — Compliance Officer, Chief Risk Officer, Chief Technology Officer, and Chief Information Security Officer. Use them as sounding boards to keep abreast of changes in the domains of technology and risk.”

Pandey said as markets grow, the role of PIDs will become even more challenging, requiring them to balance legitimate expectations of shareholders with non-negotiable public purpose of the institution. For this, PIDs have to ensure that ethical governance is deeply embedded into the very DNA of their MII.

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Concluding his remarks, Tuhin Kanta Pandey said the role of PIDs is to build and safeguard VISHWAS. “Let this word guide your actions: • V for Vigilant Oversight • I for Independent Thinking • S for Safeguarding Public Interest • H for Holistic Risk Management • W for Watchdog of Governance • A for Accountability • S for Systemic Stability.”