Sebi Classifies Significant Indices Based on Rs 20,000-Crore AUM Threshold

Sebi Introduces Regulatory Framework for Significant Indices

Markets regulator Sebi has introduced a regulatory framework that classifies any index as a "significant index" if it is benchmarked by mutual fund schemes with daily average cumulative assets under management (AUM) exceeding Rs 20,000 crore for each of the preceding six months. This move is aimed at enhancing transparency and accountability in index governance.

The new framework is based on the assessment of half-yearly periods ending on June 30 and December 31. Once classified, an index will continue to remain in the "significant" category unless its tracked AUM falls below the threshold for three consecutive years.

The regulatory framework follows the introduction of the Sebi (Index Providers) Regulations, 2024, which apply specifically to index providers administering such significant indices. The regulator has released an initial list of indices meeting the criteria, including widely tracked benchmarks such as the BSE Sensex and Nifty 50, along with broader market indices like Nifty 500 and BSE 500.

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The list also includes sectoral, debt and hybrid indices from providers such as NSE Indices Ltd, BSE Index Services Pvt Ltd, and CRISIL. Sebi said index providers offering any of these significant indices are required to apply for registration with it within six months. However, this requirement will not apply to indices already notified or authorised as benchmarks by the Reserve Bank of India (RBI) under relevant provisions of the RBI Act.

Existing providers may continue operations during the transition period, provided they submit their registration applications within the stipulated timeline. Further, entities already registered with Sebi in another capacity but offering index services will be required to set up a separate legal entity within two years to undertake index provider activities.

Sebi clarified that grievance redressal mechanisms under the regulations will apply only to significant indices provided by Sebi-registered index providers.

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