• IND SEBI issued circular regarding monitoring shareholding of market infrastructure institutions (MIIs), includes stock exchanges, depositories, and clearing corporations.
• Follows IND SEBI October 2023 issued master circular for stock exchanges.
• Also follows IND SEBI October 2023 issued new master circular for depositories.
• Follows IND SEBI August 2023 issued master circular for commodity.

Monitoring Framework

• Framework will apply to both listed, unlisted MIIs; MIIs must disclose shareholding patterns as per SEBI (listing obligations and disclosure requirements) regulations.
• Every MII must appoint designated depository (DD) to monitor shareholding limits; and if an MII's ISIN is frozen, the MII must monitor its own limits without a DD.
• DD monitors substantial shareholding thresholds, such as 5% or 15% for individual shareholders and 49% for foreign entities, and takes appropriate actions when breached.
• Trading members, associates cannot exceed 49% of exchange’s paid-up equity share capital; caution limit of 45% must be monitored, alerts are to be sent for breaches.
• In addition, at least 51% of a clearing corporation's share capital must be held by recognized stock exchanges, with no single stock exchange holding more than 15%.
• All shareholders must be fit and proper, and MIIs must ensure this for those holding 2% or more equity, notifying the public and SEBI of non-compliant shareholders.
• Breach of substantial shareholding limits or failure to meet the fit and proper criteria will result in the freezing of voting rights and corporate benefits associated with the excess shares.
• MIIs are advised to take specified actions i.e. necessary steps, put in place necessary systems for implementing prescribed matters referred to in this circular (of October 14).

Effectiveness

• The circular will take effect 90 days from issuance, i.e. 12 January 2025.