Market Infrastructure Institutions (MIIs)

Market Infrastructure Institutions

Market Infrastructure Institutions (MIIs) are institutions that provide the basic infrastructure necessary for the functioning of the securities market, including trading, clearing and settlement, and holding and transfer of securities.

According to SEBI, three types of institutions are collectively referred to as MIIs:

• Stock Exchanges
• Clearing Corporations and
• Depositories

Stock Exchanges

• Stock exchanges provide a centralized platform where investors can buy and sell financial instruments like stocks, bonds, and derivatives.
• They ensure fair and efficient price discovery, liquidity and transparency thereby contributing to the overall stability of financial markets.
• Examples: NSE and BSE

Clearing Corporations

• They help validate and finalise securities trades and ensure that both buyers and sellers honour their obligations.
• Example: Multi Commodity Exchange Clearing Corporation

Depositories

• Depositories hold investors’ securities in dematerialised or electronic form and facilitate their transfer.
• In India, there are two major depositories - the NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited). Both of these depositories are regulated by the Securities and Exchange Board of India (SEBI).

Regulation

• Securities and Exchange Board of India (SEBI) regulates MIIs to maintain transparency, investor protection, and financial stability i.e. the integrity of the financial ecosystem.