The International Financial Services Centres Authority (IFSCA) has issued a pivotal circular—IFSCA/CMD-DMIIT/PID-MII/2025-26/001—on October 13, 2025, aimed at enhancing the governance standards of Market Infrastructure Institutions (MIIs) operating within International Financial Services Centres (IFSCs). This move brings greater clarity, structure, and accountability to the appointment and performance review of Public Interest Directors (PIDs), while aligning with global best practices in financial market regulation.
Why This Matters
Market Infrastructure Institutions—such as stock exchanges, clearing corporations, and depositories—form the backbone of any financial ecosystem. Ensuring that their governance frameworks are transparent, accountable, and competency-driven is critical, especially in the globally connected, innovation-focused IFSC ecosystem.
IFSCA’s latest circular builds on the existing MII Regulations, 2021, specifically targeting Chapter III, which governs the composition, appointment, and performance of directors on MII boards.
Key Highlights of the Circular
1. Balanced Board Composition
The circular mandates that the Governing Board of each MII should include directors with deep expertise in capital markets, finance, accountancy, law, regulatory practices, technology, and risk management. At least one PID must represent each of the core domains, ensuring diverse and well-informed decision-making at the board level.
This move ensures that PIDs are not just independent in name but bring genuine domain expertise, enhancing oversight and strategic guidance.
2. Robust PID Appointment Process
IFSCA has prescribed a structured, multi-step appointment process:
- The Nomination and Remuneration Committee (NRC) must identify at least two qualified candidates per vacancy.
- The Governing Board evaluates these candidates independently before forwarding them to IFSCA for final approval.
- In case of dissatisfaction, IFSCA reserves the right to nominate a PID directly, under its regulatory powers.
Importantly, shareholder approval is not required for appointing PIDs—emphasizing that public interest oversight is independent of ownership influence.
3. Streamlined Reappointments
For reappointing existing PIDs, MIIs must apply at least two months before term expiry, taking into account:
- The director’s contribution and board participation
- The diversity of experience on the board
- A performance review, to be conducted by the NRC
This ensures that reappointments are merit-based and not automatic, maintaining performance accountability.
4. Mandatory Performance Reviews and Training
Each MII must establish a performance review policy for PIDs. The evaluation must consider:
- The director’s functional expertise
- Prior contributions
- Personal competencies and ethics
Additionally, annual training programs in areas like capital markets, technology, and compliance must be organized to keep PIDs updated with evolving market trends and regulations.
5. Transparency and Compliance
The circular includes a detailed Annexure-1, listing the information MIIs must collect from appointed PIDs—including professional history, regulatory declarations, and compliance certifications. This aims to preempt conflicts of interest and ensure full disclosure.
Final Thoughts
IFSCA’s October 2025 circular represents a decisive step toward institutionalizing good governance in India’s IFSCs. By standardizing the appointment, evaluation, and qualification of PIDs, the regulator is ensuring that MIIs remain resilient, transparent, and accountable—core traits needed in today’s complex global financial landscape.
For MIIs and their stakeholders, this is a clear message: strong governance is not optional—it is foundational.