- SEBI proposed a regulatory framework for Significant Indices to enhance governance
- Significant Indices have AUM over Rs 20,000 crore from domestic mutual fund schemes
- AUM is calculated using daily averages over six months ending June 30 and Dec 31
Markets regulator Securities and Exchange Board of India on Monday proposed a regulatory framework for 'Significant Indices' as a part of its effort to improve the governance of Index Providers in the securities market.
In its consultation paper, SEBI has defined "Significant Indices" as those administered by an Index Provider and benchmarked by domestic mutual fund schemes with a cumulative Assets Under Management (AUM) exceeding Rs 20,000 crore.
The threshold should be calculated based on the daily average AUM of domestic mutual fund schemes for each of the past six months, ending on June 30 and December 31 of each year.
For calculating the AUM, if a mutual fund scheme tracks multiple indices, the AUM is split proportionally. For an "index of indices," the AUM of underlying indices is included based on their respective weights.
The proposal, if implemented, aims to increase transparency and accountability in financial benchmarks.
SEBI suggested that providers of the identified Significant Indices would submit an application for registration as an Index Provider within six months from the date of issuance of a circular. This requirement will not apply to the providers if all their significant indices are regulated by the Reserve Bank of India.
Further, the grievance redressal mechanism will apply only to Significant Indices provided by the index providers registered with Sebi.
The SEBI has sought public comments till January 30 on the proposal.
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