SEBI Consultation paper on Regulatory Framework for Index Provider
The Securities and Exchange of Board of India (SEBI) is planning to introduce a regulatory framework for index providers, both domestic and foreign, for increasing transparency and accountability in governance and administration of the financial benchmarks and recently released a consultation paper providing that the index providers offering indices for use in India will be required to register with SEBI for obtaining authorisation and must have a minimum net worth of Rs 25 crore. If implemented, Regulations for index providers will prescribe provisions for eligibility criteria, compliance, disclosures, periodic audits, and penal action in case of non-compliance or incorrect disclosures. Currently, the index participants are outside the regulatory purview.
Overall, governments and policy makers around the globe rely on the International Organization of Securities Commissions (IOSCO) Principles and/or existing laws to mitigate manipulation and vulnerability issues pertaining to benchmarks and benchmark administrators.
The proposals in the consultation paper are based on the recommendation of the Secondary Market Advisory Committee (SMAC). Comments from market participants have to be submitted by January 27, 2023.
