New Delhi: In order to strengthen the board of the commodity exchanges in the backdrop of NSEL scam, the regulator FMC has revised norms for hiring managing director and also made it mandatory for directors and key management personnel to follow strict code of conduct and code of ethics.
Forward Markets Commission (FMC) has also made it compulsory for the commodity exchanges to set up at least eight committees to assist the board. The revised guidelines, which are made effective from June 11, are issued to align with the Sebi norms.
“Since the commodity exchanges are Financial Market Infrastructure Institutions having an important regulatory role, there is a need to strengthen their corporate governance framework,” FMC said.
FMC, which revised shareholding norms for national bourses on May 6, 2014, felt that there “is also a need to align the ‘Norms on the Constitution of the Board of Directors, nomination of independent directors and appointment of Chief Executives at the Nationwide Commodity Exchanges' with the revised shareholding norms.”
As per the fresh norms, the exchange should constitute a selection committee for hiring managing director. The committee would comprise of five persons — two independent directors, two shareholder directors and one independent external person.
Further, the exchanges should ensure that one independent director will be part of the selection committee and the meetings of such committee at all times, it said. “The person to be appointed as managing director/chief executive of the exchange should satisfy the criteria of fit and proper person,” it added.