Source: Mint
Why in news?
The Securities and Exchange Board of India (SEBI) has proposed a review and revamp of its ‘fit and proper’ framework for market intermediaries, citing concerns that some existing provisions may be overly rigid and punitive at a preliminary stage of legal proceedings.
What is the ‘Fit and Proper’ Framework?
- A regulatory test used by SEBI to assess whether:
- Market intermediaries,
- Their promoters, directors, or key management personnel
are suitable to operate in the securities market.
- Governed by Schedule II of the SEBI (Intermediaries) Regulations.
- Criteria include:
- Integrity
- Reputation
- Competence
- Financial soundness
Why is SEBI Reviewing It Now?
- Five years of enforcement experience has highlighted unintended consequences.
- Market representations flagged:
- Onerous compliance burdens
- Risk of irreparable reputational and business harm due to early disqualifications
- SEBI also examined global best practices, prompting reconsideration.
