SEBI Publishes Manual on Industry Standards, ISFs, and Their Roles

The market regulator has introduced the Industry Standards Recognition Manual to establish formal guidelines for recognizing industry standards and regulating the operations of Industry Standard Forums (ISFs).

ISFs were initially launched as a pilot program in July 2023 to assist different market segments in adhering to SEBI's directives.

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Details of the Manual

The Securities and Exchange Board of India (SEBI) issued the manual on February 12.

A press release from SEBI outlined the rationale behind this initiative: "While the Industry Standards Fora are currently operating as pilot programs, there are no established norms governing their formation and functioning. Each forum has been operating with flexibility in determining its own mechanisms, leading to variations in structure and operations. These differences include the choice of regulations or circulars to develop implementation standards, the stage at which SEBI’s consultation is sought, and the process for gathering industry opinions."

SEBI's Framework for Recognizing ISFs

To address these inconsistencies, SEBI has now introduced a framework for recognizing ISFs, ensuring a more standardized approach to their establishment and processes.

According to the manual, ISFs are not responsible for drafting regulations or circulars, nor for proposing amendments to existing ones. However, in exceptional cases where significant challenges arise in implementing regulatory directives, an ISF may inform SEBI and suggest necessary modifications.

Importantly, ISFs will not function as self-regulatory bodies and will not have the authority to take regulatory action against industry participants who fail to adhere to forum standards.

Each ISF must be chaired by an individual with at least 10 years of industry experience, and up to three vice-chairpersons may be appointed. Forum members should include active practitioners, representatives from market infrastructure institutions (MIIs) as needed, individuals required to comply with regulatory directives, and any relevant advisers or consultants.