Markets regulator Sebi today barred trading and clearing members as well as their associates from holding any position on the governing board of any stock exchange.
The norms will also be applicable to clearing corporations.
"No trading member or clearing member, or their associates and agents, irrespective of the stock exchange or clearing corporation of which they are members, shall be on the governing board of any recognised stock exchange or recognised clearing corporation," Sebi said in a circular.
In case a person who is a director in an entity, which itself is a trading member or clearing member or has associate as a trading member or clearing member, the person will be deemed to be a trading member or clearing member.
An individual who is on the board of a public financial institution (PFI) or public sector bank would not be deemed as a clearing/trading member.
Similarly, persons who are board members in an entity that has no identifiable ultimate promoter or has well-diversified shareholding would not be considered as clearing or trading members.
"Further, independent directors of associates of PFI or bank in the public sector, who are clearing members and/or trading members and where the majority shareholding is that of such PFI or bank in the public sector, will not be deemed to be a clearing member and/or trading member," the regulator said.
Sebi asked stock exchanges and clearing corporations to monitor and ensure the compliance of the regulation on a continuous basis to ensure directors appointed on their governing board do not get associated with a trading member or clearing member after approval and appointment.
