Framework for financial market Self-Regulatory Organisations released by RBI

The Reserve Bank of India has on August 19 issued a framework to recognise self-regulatory organisations in the financial markets, in order to help enhance the compliance culture and provide a consultative platform for policy making.

"In deliverance of this role, the SRO shall frame necessary best practices/standards/codes within the regulatory framework prescribed by the Reserve Bank of India for voluntary adoption by its members," but these will not be a substitute to the regulatory framework, the RBI said.

Self-Regulatory Organizations (SROs) will need to help improve the sectors they represent and addressing key industry issues, RBI said. They will be responsible for setting minimum standards and establishing conventions for professional market conduct. Additionally, SROs are expected to collaborate closely with the Reserve Bank of India (RBI) to enhance compliance with regulatory guidelines and to detect early warning signals, among other responsibilities.

The RBI said it will retain the authority to revoke the recognition of an SRO, if it finds that the organization’s operations are harmful to public interest or if the SRO is engaged in activities that are inconsistent with its stated objectives.