Norms for Internal Audit Mechanism and composition of the Audit Committee of Market Infrastructure Institutions

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..... urities. MIIs have a unique operating model in that they are empowered by law to regulate their members such as Trading Members, Clearing Members, Depository Participants, etc. The primary objective of an MII is to focus more towards serving as a crucial public utility infrastructure institution and a first line regulator for its constituents, while operating as efficient, innovative and competitive commercial entity. A. Norms for the Internal Audit Mechanism at MIIs 2. It is essential that the MIIs shall operate in an efficient and transparent manner, be accountable for their actions, maintain highest standards of governance and risk management, etc. Internal audit helps to identify, assess, and mitigate risks that could impact th .....

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..... oved by the Audit Committee and governing board of the MII. 4.3. Internal auditor of an MII shall report only to the Audit Committee of the MII. 4.4. The scope of the internal auditor shall include all functions and activities of the MIIs (i.e. functions and activities of Vertical 1, Vertical 2 and Vertical 3) and shall be approved by the Audit Committee of the MII (including any other area as may be specified by the Audit Committee). Further, in order to standardize the terms of reference of the internal auditor across similar MIIs, the MIIs may do so in consultation with the Industry Standards Forum of MIIs (ISF). 4.5. The observations of the internal auditor shall be sent to the respective Head of Departments (HoDs) for their comments .....

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..... ot consist of any Executive Director (including the Managing Director) of the MII; 6.2. The auditors of the MII and the Key Management Personnel (KMPs) shall have a right to be heard in the meetings of the Audit Committee when it considers the auditor's report but shall not have the right to vote; and 6.3. Wherever required, the KMPs (including the MD) can be invited to attend the meeting of the Audit Committee with permission of the Chairman of the Committee but shall not have the right to vote. 7. Applicability: The provisions of the circular shall be applicable from the 90th day of issuance of the circular. 8. All MIIs are advised to: i. Take necessary steps and put in place necessary systems for implementation of the above. ii. .....

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