The Reserve Bank of India (RBI) on 19 August issued a framework for recognition of self-regulatory organisations in the financial markets space to help strengthen compliance culture and provide a consultative platform for policy making.
Key points
- The RBI invited applications from entities which meet the eligibility criteria. The SRO for financial markets will need to be set up as a not-for-profit company, must have a minimum net worth of ₹10 crore, and should have the ability to create infrastructure that enables it to discharge responsibilities of an SRO on a continuing basis.
- The proposed self-regulatory organisations (SROs) can play a vital role in developing industry standards and best practices and ensuring that members adhere to these, according to the central bank.
- SROs will have to meet a set of overarching objectives for betterment of the sector they represent and address critical industry concerns.
- They will also establish minimum benchmarks and conventions for professional market conduct.
- The SRO will act as the “collective voice of its members” in engagements with RBI, government authorities and other statutory and regulatory bodies and represent and address broader industry concerns.
- Financial markets refer to interest rate markets that encompass government securities; money markets including the market for repo in government securities and corporate bonds; foreign exchange markets; and derivatives on interest rates/prices, forex rates, and credit.
