Corrigendum to Circular on Ease of Doing Business in the context of Standard Operating Procedure for payment of “Financial Disincentives” by Market Infrastructure Institutions (MIIs) as a result of Technical Glitch

Executive Summary: This circular, dated October 14, 2024, is a corrigendum to the SEBI circular dated September 20, 2024, regarding the Standard Operating Procedure for payment of Financial Disincentives by Market Infrastructure Institutions (MIIs) due to Technical Glitches. It clarifies the applicability of the SOP to Commodity Derivatives Exchanges/Clearing Corporations by referencing relevant sections of the Master Circular for Commodity Derivatives Segment dated August 04, 2023. The circular also outlines procedures following the identification of a technical glitch. Key Points / Main Content: * **Clarification Regarding Applicability to Commodity Derivatives:** * The Standard Operating Procedure (SOP) for payment of Financial Disincentives by MIIs due to Technical Glitches, as per the circular dated September 20, 2024, is applicable to Commodity Derivatives Exchanges/Clearing Corporations. * **Reference to Master Circular for Commodity Derivatives Segment:** * Paragraphs 1 and 4 of the September 20, 2024 circular should include reference to paragraph 16.8 of the Master Circular dated August 04, 2023. * Paragraph 4.1 of the September 20, 2024 circular should include paragraph 16.8.1 of the Master Circular dated August 04, 2023. * Paragraph 4.2 of the September 20, 2024 circular should include Clauses 3, 4, and 5 of Annexure ZF to the Master Circular dated August 04, 2023. * Paragraph 4.3 of the September 20, 2024 circular should include Clause 6 of Annexure ZF to the Master Circular dated August 04, 2023. * Paragraph 4.4 of the September 20, 2024 circular should include Clauses 7 and 8 of Annexure ZF to the Master Circular dated August 04, 2023. * **Procedure Following Identification of Technical Glitch:** * Following Clause 2.4 of Annexure ZE of the Master Circular dated August 04, 2023, the following text is to be inserted: * "2.5 SEBI on identification of the Technical Glitch resulting into Financial Disincentive to the MIIs, or upon receipt of the information of any such instance shall provide an opportunity to the concerned MIIs to make their submissions in respect of the facts of the case." * "2.6 MIIs shall carry out internal examination pertaining to occurrence of technical glitches to ascertain individual accountability and take appropriate action including suitable recording and reckoning in the performance appraisal of those individuals. SEBI would retain the right to initiate enforcement action against the individuals at the MII, if there is sufficient ground to do so." Impact Analysis: * **Stock Exchanges, Clearing Corporations, and Depositories (MIIs):** * Impact: MIIs, particularly those dealing with Commodity Derivatives, are subject to the SOP for Financial Disincentives due to Technical Glitches, as clarified by the included references to the Master Circular for Commodity Derivatives Segment. They must also conduct internal examinations to ascertain individual accountability for technical glitches. * Action Required: MIIs should review their existing procedures in light of this corrigendum, specifically considering the referenced sections of the Master Circular for Commodity Derivatives Segment. They should also establish procedures for internal examination of technical glitches. * **SEBI:** * Impact: SEBI retains the right to initiate enforcement action against individuals at the MII if there is sufficient ground to do so. * Action Required: SEBI will provide an opportunity to the concerned MIIs to make their submissions in respect of the facts of the case, on identification of the Technical Glitch resulting into Financial Disincentive to the MIIs, or upon receipt of the information of any such instance. * **Investors:** * Impact: This circular aims to protect the interests of investors in securities and promote the development of, and to regulate the securities market. * Action Required: No direct action required.

Key Entities Referenced