In a move to strengthen the transparency and reliability of financial benchmarks in India, the Securities and Exchange Board of India (SEBI) has proposed a detailed regulatory framework for index service providers. This new proposal is aimed at improving governance standards and preventing potential conflicts of interest in index construction and management.
“SEBI’s proposed framework seeks to ensure accountability and integrity in index services to protect investor interests.”
Focus on Transparency and Accountability
SEBI’s consultation paper lays out multiple provisions including:
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Mandatory registration of index providers
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Minimum net worth criteria
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Enhanced disclosures and governance norms
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Clear guidelines on index design, review, and oversight
The objective is to ensure fair representation of market conditions in indices and eliminate any scope for manipulation. These measures are expected to significantly impact how indices are built and maintained across the Indian stock market.
“The framework aims to prevent manipulation and ensure that indices truly reflect market realities.”
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Safeguarding Investors and Market Confidence
SEBI has highlighted that investors rely heavily on indices for various investment decisions, making it crucial that these benchmarks are both trustworthy and unbiased. The proposed regulations will help in maintaining investor confidence, especially for those investing through index-linked products such as ETFs and mutual funds.
The plan also includes setting up mechanisms for dispute resolution and compliance monitoring, ensuring that index providers remain accountable at all stages.
“SEBI’s focus is to protect investors by enhancing the credibility and transparency of Indian market indices.”
Public Consultation Underway
To refine the framework further, SEBI has invited public comments on the consultation paper. The feedback will help in tailoring the final set of regulations to best suit market needs while maintaining global standards.
This development is expected to boost the trust of both domestic and foreign investors and enhance the overall integrity of the Indian capital markets.
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