MUMBAI: The markets regulator the Securities and Exchange Board of India (Sebi) has proposed a Rs 20,000-crore asset threshold to identify “significant indices” that will come under the ambit of its newly notified index providers regulations, 2024, as part of efforts to strengthen governance and oversight of benchmarks used by mutual funds. Under the proposed new regulatory framework is part of its effort to improve the governance of index providers in the securities market.
In a consultation paper issued Monday, the regulator said an index will be classified as “significant” if it is tracked or used as a benchmark by domestic mutual fund schemes with cumulative assets under management in excess of Rs 20,000 crore. The Sebi has also published an indicative list of significant indices based on mutual fund data between January 1 and June 30, 2025. The move comes as exchange-traded funds and index funds accounting for a growing share of investor assets, bringing index providers under a formal registration and regulatory framework.
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, the consultation paper said. 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, it said. The proposal, if implemented, aims to increase transparency and accountability in financial benchmarks. Sebi wants the providers of the identified significant indices to submit an application for registration as an index provider within six months from the date of issuance of the circular. This requirement will not apply to the providers if all their significant indices are regulated by the Reserve Bank. Further, the grievance redressal mechanism will apply only to significant indices provided by the index providers registered with Sebi, which has sought public comments till January 30 on the proposal.