Market regulator Sebi has notified new governance rules for the depositories including those related to composition of their boards,salaries of top officials and their listing. Depositories are those entities that hold securities deposited by others and where these securities are exchanged,while Depository Participant (DPs) largely function as agents of the depositories and as intermediaries between the depository and the investors. In India,there are two major depositories,NSDL and CDSL. As per the regulations notified by Sebi (Securities and Exchange Board of India),a depository board would have to include shareholder directors,public interest directors and managing director. Besides,the chairperson would have to be elected from amongst the public interest directors,whose number can not be less than the number of shareholder directors. On the other hand,the Managing Director cannot be included in either the category of public interest directors or shareholder directors. Sebi said that all directors would have to abide by the Code of Conduct specified under its regulations and a compensation committee would determine the pay of key management personnel. Sebi said that a depository may apply for listing of its securities on a recognised stock exchange,subject to certain conditions. Also,depositories would need to segregate its regulatory departments from other departments and would need to have a 'Business Continuity Plan' for data and electronic records to prevent,prepare for,and recover from any disaster. In order to ensure the segregation of regulatory departments,every depository shall adopt a "Chinese Wall" policy which separates the regulatory departments of the depository from the other departments. The employees in the regulatory departments shall not communicate any information concerning regulatory activity to any one in other departments. The employees in regulatory areas may be physically segregated from employees in other departments including with respect to access controls. In exceptional circumstances employees from other departments may be given confidential information on "need to know" basis,under intimation to the Compliance Officer.
