India regulator proposes easing stock exchange board rules

India's Securities and Exchange Board (SEBI) on Wednesday proposed easing the eligibility restrictions for board members at stock exchanges and other market infrastructure institutions, saying the existing rules have made it hard to attract qualified candidates.

Current rules generally bar anyone associated with stockbrokers or other market intermediaries from serving on the boards of exchanges, clearing corporations, or depositories.

SEBI noted that the existing framework can disqualify applicants even when their ties to a market intermediary are indirect, which is particularly likely within large conglomerates whose various subsidiaries operate independently.

The proposal would allow directors of widely held firms to sit on these boards even when a separate group company acts as a broker, clearing member, or depository participant.

Under the proposed definition, a widely held company is one in which no private shareholder—acting alone or with related parties—owns or controls 10% or more of the firm. Public-sector investors would not be counted toward that limit.

SEBI said the revision could draw more experienced professionals into board roles at market infrastructure institutions.

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