SEBI to bring in a regulatory framework for index providers

29 Dec 2022 , 10:35 AM

The Securities and Exchange Board of India (Sebi) proposed a regulatory framework for index providers on Wednesday.

The proposed framework will require index providers to follow the principles of the International Organization of Securities Commissions (IOSCO).

The proposed regulations will include provisions for ensuring eligibility criteria, compliance, disclosures, periodic audits, and penalties for noncompliance and inaccurate disclosures.

At the moment, the benchmarks on which products are traded on Indian stock exchange platforms, as well as the indices tracked by fund managers, are owned and managed by entities that are generally either subsidiaries of stock exchanges or joint ventures between an exchange and an index provider or any entity engaged in credit rating. 

In January 2011, Sebi allowed stock exchanges to launch derivative products based on foreign indices.

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