SEBI EYES TO REGULATE INDEX PROVIDERS

New Delhi, May 31: Markets regulator Sebi on Wednesday proposed new norms to regulate index providers entities which design and develop benchmark indices such as Sensex and Nifty.

The index operators, which include subsidiaries of stock exchanges and independent entities such as S&P, currently do not come under Sebi’s direct regulatory purview.

The proposed new norms include a code of conduct for index operators, while mandating more disclosures and greater transparency when including or excluding a stock from the indices.

Besides, the proposed measures would address issues like avoiding conflict of interest, creation of a robust audit mechanism and a whistle-blower framework to facilitate early detection of potential misconduct.

These suggestions are in line with International Organisation of Securities Commissions principles which are globally accepted standards for index providers.

Sebi has sought comments till June 20 on the proposed norms and final regulations will be put in place after taking views of all stakeholders into consideration.

In a discussion paper, Sebi said that an index provider should have appropriate governance arrangements in place in order to protect the integrity of the index administration process, mitigate conflicts of interest, and segregate those responsible for index governance from those responsible for commercialising the indices by implementing appropriate firewalls and employing separate reporting lines for each function.

SEBI HAS sought comments from public till June 20 on the proposed norms before putting the final regulations in place