The Securities and Exchange Board of India (SEBI) has introduced a major governance and oversight upgrade for India’s stock exchanges and clearing corporations through the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Fourth Amendment) Regulations, 2025. Issued under F. No. SEBI/LAD-NRO/GN/2025/276, the amendments will come into effect 30 days after their publication in the Official Gazette.
These reforms focus on strengthening leadership accountability, enhancing risk governance, and institutionalizing cybersecurity and technology preparedness—critical priorities for India’s fast-evolving capital markets.
1. Strengthening Leadership Structure: Executive Directors Added
In Regulation 23, SEBI has formally expanded the leadership framework by adding executive directors alongside managing directors. This structural change ensures deeper managerial capacity within stock exchanges and clearing corporations, strengthening decision-making and continuity.
Additionally, sub-regulation updates clarify that both managing directors and executive directors are responsible for critical decision flows, bringing governance clarity
2. Expanded Scope: Managing Director’s Role and Responsibilities
SEBI has significantly broadened the scope of Regulation 25, which now explicitly covers the appointment, role, and responsibilities of the managing director (MD).
A newly added sub-regulation (8) assigns five major responsibilities:
- Managing the full affairs of the stock exchange or clearing corporation
- Ensuring full compliance with all applicable Acts, rules, circulars, guidelines, and directives
- Overseeing functions under Vertical 1 and Vertical 2—ensuring they operate in the public interest rather than revenue-driven motives
- Ensuring robust, marketwide risk management
- Maintaining adequate systems and infrastructure for smooth, round-the-clock functioning
Another major update allows the MD, with prior board approval, to serve as a non-executive director or board member in specific types of institutions including Section 8 companies, non-commercial government companies, educational institutions, or universities. This expands knowledge-sharing opportunities while preserving checks and safeguards.
3. New Regulation 25A: Mandatory Appointment of Executive Directors
SEBI now requires every recognised stock exchange and clearing corporation to appoint two executive directors, heading Vertical 1 and Vertical 2 respectively, with an optional third director for Vertical 3.
Highlights include:
- Executive directors will hold stature equivalent to that of the MD
- Appointment, renewal, and termination processes mirror those applicable to the MD
- Executive directors cannot serve on external corporate boards except subsidiaries, and only with prior approval
- The Vertical 1 executive director is accountable for infrastructure and systems
- The Vertical 2 executive director leads overall risk management
This reform ensures that governance is not concentrated in a single leadership role and enhances operational resilience.
4. New Mandatory Technology Leadership Roles: CTO and CISO
Recognizing the increasing importance of cybersecurity and technological stability in market infrastructure, SEBI has added two new regulations:
Regulation 30B – Chief Technology Officer (CTO)
Every exchange and clearing corporation must appoint a CTO responsible for:
- IT risk management
- IT policy and risk framework formulation
- Addressing and closing technology audit findings
Regulation 30C – Chief Information Security Officer (CISO)
The CISO will:
- Identify, assess, and mitigate cybersecurity risks
- Implement cybersecurity and cyber-resilience policies approved by the governing board
- Oversee development and maintenance of information security policies
These additions reflect SEBI’s commitment to strengthening cyber and technology resilience amid expanding digital trading ecosystems.
Conclusion: A Forward-Looking Framework for Market Safety and Stability
SEBI’s Fourth Amendment Regulations, 2025 represent a significant upgrade in governance, risk oversight, and technological preparedness within India’s stock exchanges and clearing corporations. By institutionalizing stronger managerial layers and embedding cybersecurity leadership, SEBI aims to ensure that India’s market infrastructure remains robust, transparent, and future-ready.
These reforms reinforce investor confidence and support the long-term integrity of India’s securities market ecosystem.