Sebi Proposes Major Overhaul to 'Fit and Proper Person' Framework for Market Intermediaries

Sebi has introduced proposals to overhaul its 'fit and proper person' criteria for market intermediaries, aiming for clearer regulations. Key suggestions include formalizing the right to a hearing, refining disqualification conditions, and reducing the ineligibility period for registration. The public can comment on these proposals until February 25.

On Wednesday, the Securities and Exchange Board of India (Sebi) unveiled proposals to significantly reform its 'fit and proper person' requirements for market intermediaries. This move seeks to enhance procedural transparency and fairness within the regulatory framework.

Sebi's consultation paper outlines recommended changes to Schedule II of the Intermediaries Regulations, 2008, aiming to codify the right to a hearing and redefine disqualification criteria. The overhaul also suggests diminishing regulatory ambiguity for applicants and intermediaries while having implications for key management personnel (KMPs) and controlling persons.

A notable recommendation suggests eliminating the disqualification linked to the initiation of winding-up proceedings, considering only conclusive winding-up orders relevant. Public feedback on these proposals is open until February 25.

(With inputs from agencies.)