Sebi's New Regulatory Framework for 'Significant Index'

Sebi unveils a regulatory framework classifying indices as 'significant' if mutual fund schemes benchmarked by them possess daily average cumulative assets exceeding ₹20,000 crore for past six months. This move aims to enhance transparency and accountability in index governance, with certain criteria and registration requirements for index providers.

The Securities and Exchange Board of India (Sebi) has rolled out a regulatory framework designed to classify certain indices as 'significant'. Under this new regulation, any index benchmarked by mutual fund schemes with daily average cumulative assets under management (AUM) surpassing ₹20,000 crore for each of the preceding six months will be labeled significant.

This strategic move aims to boost transparency and accountability in how indices are governed. Sebi has specified that the threshold will be assessed biannually, with reviews completed by June 30 and December 31. A 'significant' index will retain its status until its tracked AUM dips below the threshold for three consecutive years.

The implementation of Sebi (Index Providers) Regulations, 2024, stipulates that index providers offering such indices must register with Sebi within six months. However, indices already recognised by the Reserve Bank of India as benchmarks are exempted. Current service providers need to set up separate legal entities to continue index activities.