SEBI Update - Significant Indices’ under SEBI (Index Providers) Regulations, 2024

The Securities and Exchange Board of India (“SEBI”) has operationalized the regulatory framework for Index Providers through the SEBI (Index Provider) Regulations, 2024 to enhance transparency, governance, and accountability in the administration of indices used in the Indian securities market. SEBI has clarified that any benchmark or index (including index of indices) based on listed securities will qualify as a “Significant Index” if the daily average cumulative AUM of mutual fund schemes tracking or benchmarking such index exceeds ₹20,000 crore for each of the preceding six months ending on June 30 and December 31. Once classified as a Significant Index, it shall continue to remain so unless the threshold is not met for three continuous years. Index Providers administering such Significant Indices are required to apply for registration with SEBI within six months from the date of the circular, except where the indices are already recognized by RBI as “Significant Benchmarks” or “Authorized Benchmarks” under Section 45W of the RBI Act, 1934. Further, SEBI-regulated entities undertaking index provider activities departmentally must establish a separate legal entity for such activities within two years. The circular also clarifies that the grievance redressal mechanism under the IP Regulations shall apply only to Significant Indices provided by SEBI-registered Index Providers, and the provisions of the circular have come into immediate effect.