SEBI Revamps 'Fit and Proper' Framework for Market Intermediaries

In a significant regulatory update, the Securities and Exchange Board of India (Sebi) has revamped its 'fit and proper person' criteria for market intermediaries. The amendments redefine grounds for disqualification, eliminating automatic penalties purely based on the filing of criminal cases, FIRs, or charge sheets related to economic offences.

The updated framework emphasizes procedural fairness and requires intermediaries to report any disqualifying events to Sebi within 15 working days. Under the revised guidelines, while mere accusations won't trigger disqualification, a conviction involving economic offences now ensures it.

Moreover, Sebi has shortened the cooling-off period for registration applications from one year to six months, streamlining the regulatory process. The new rules also clarify that the status of associates will not impact eligibility unless directly linked. These changes follow a proposal approved by Sebi in March.