Sebi proposes framework for 'Significant Indices' to improve governance at Index Providers

Market regulator Securities and Exchange Board of India (Sebi) has proposed an asset under management (AUM) threshold of Rs 20,000 crore to consider a benchmark or index as 'Significant Indices'.The move follows internal deliberations and discussions with the Association of Mutual Funds in India (AMFI) with a view to promote transparency and accountability in the governance and administration of indices in the securities market.The cumulative AUM for this purpose will be computed based on the daily average of AUM of domestic mutual funds schemes for each month of the past six months ending on June 30 and December 31 of every year, the regulator proposed in a consultation paper issued on Monday.The significant indices under the regulation were defined as the indices administered by an index provider, which are tracked or benchmarked by domestic mutual fund schemes with the cumulative assets under management exceeding the limits as may be specified from time to time.Sebi has notified the regulatory framework for index providers in the securities market through the SEBI (Index Provider) Regulations, 2024."In terms of Regulation 3(1), the Regulations shall be applicable only to Index Providers that administer Significant Indices consisting of securities listed on a recognized stock exchange in India for use in the Indian securities market," the consultation paper said.If a mutual fund scheme tracks more than one index or benchmark, the cumulative AUM for each index will be calculated by including only the portion of the scheme’s AUM linked to that specific index or benchmark, the consultation paper said.In case of index of indices, the cumulative AUM tracking such underlying indices would also include the AUM tracking such indices in proportion to the respective weights, the paper added.The providers of the 'Significant Indices' will be required to submit an application for registration as an Index Provider, in accordance with Regulation 4 of the SEBI (Index Providers) Regulations, 2024, within a period of six months from the date of issuance of this circular."This requirement shall not apply to the providers, if all their significant indices are regulated by the Reserve Bank of India, including the Significant Benchmarks notified by the Reserve Bank of India under Section 45W of the Reserve Bank of India Act, 1934 (2 of 1934)," the paper said.Sebi has set the last date for sending feedback on February 10, 2026.(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)