The regulatory puzzle of MIIs

Market infrastructure institutions are being turned into de facto PSUs. Have we failed to find the right balance in their operations?

The committee constituted by the Securities and Exchange Board of India (Sebi) to review the governance framework for market infrastructure institutions (MIIs) — such as exchanges — recently released its draft report for public comments.
 

MIIs are unique institutions providing vital infrastructure for trading, settlement and record-keeping. They are vested with regulatory responsibilities while also pursuing commercial interests like other profit-oriented entities. In view of the conflicting nature of these different roles of MIIs, the governance standards of MIIs need to be robust to engender market confidence and deter malpractice.
 

Let us first summarise the views of the committee. The