TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Index Providers) Regulations, 2024.
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....from the date of their publication in the Official Gazette. Definitions. 2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them and their cognate expressions and variations shall be construed accordingly, - (a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) "Administration" means all stages and processes involved in the production and dissemination of a benchmark or index, and includes- (i) collecting, analyzing or processing information or expressions of opinion for the purposes of determination of a benchmark or index; (ii) determining a benchmark or index through the application of a formula or through another method of calculating the information or expressions of opinions provided for that purpose; and (iii) dissemination to subscribers, including any review, adjustment and modification to this process. (c) "Audit Trail" means the documentation and retention of all relevant data, submissions, other information, judgments, including the rationale for any inclusion or exc....
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....fluence the quality of data such as market events or impairment of the credit quality of a buyer or seller; (l) "Form" means any of the Forms set out in the First Schedule; (m) "Index Provider" means a person who controls the creation, operation and administration of a Benchmark or an Index, whether or not it owns the intellectual property rights relating to the Benchmark or an Index, and is in particular, responsible for all stages of the Benchmark or an Index administration process, including: (i) the calculation of the Benchmark or an Index; (ii) determining and applying the Benchmark or an Index methodology; and (iii) disseminating the Benchmark or an Index. (n) "Methodology" means the written rules and procedures according to which information is collected and the Benchmark or an Index is determined; (o) "Net-worth" shall have the same meaning assigned to it under sub-section (57) of section 2 of the Companies Act, 2013 (18 of 2013); (p) "Publish or make available" refers to the requirement of an Index Provider to provide a document or notice to the Stakeholders where the mean....
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....nt thereto, as the case may be. Applicability of these Regulations. 3. (1) These regulations shall be applicable only to Index Providers that administer Significant Indices consisting of securities listed on a recognized stock exchange in India for use in the Indian securities market. ( 2) These regulations shall not be applicable to Index Providers, who administer:- (a) their Indices consisting only of global asset classes or consisting of global assets and Indian securities whether for use in the Indian securities market or elsewhere; (b) their Indices for exclusive use in a foreign jurisdiction. CHAPTER II REGISTRATION OF INDEX PROVIDERS Application for grant of certificate of registration. 4. (1) On and from the date of commencement of these regulations, no entity shall act as an Index Provider without a certificate of registration issued by the Board Provided that an existing entity falling within the scope of these regulations and which is not registered with the Board may continue to carry on its activity for a period of six months from the date of commencement of these regulations or&n....
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....riod of two years from the date of commencement of these regulations. (b) the applicant has a minimum net worth of twenty-five crore rupees or an equivalent amount in the currency of the country in which the applicant is incorporated, determined on the basis of prevailing foreign exchange rate at the time of application: Provided that, an existing entity falling within the scope of these regulations and which is not registered with the Board as an Index Provider, shall comply with the net worth requirement criteria within a period of two years from the date of grant of the certificate of registration. (c) the applicant has in place necessary infrastructure and adequate human resources with the relevant professional qualifications to conduct the operations and business of an Index Provider. (d) the applicant, its promoters and directors fulfil the fit and proper requirement for the grant of a certificate of registration. Criteria for Fit and Proper person. 6. For the purpose of determining whether an applicant is a fit and proper person, the Board shall take into account the criteria specified in Schedule II of the Securities and Exchange Board of India (Inte....
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....n 9 shall be subject to the following conditions, namely: (a) the Index Provider shall comply with the provisions of the Act, Rules and Regulations made thereunder and the guidelines, circulars and directions issued by the Board from time to time; (b) change in the information or particulars furnished to the Board by the Index Provider at the time of making the application for a certificate, shall be informed to the Board in writing within thirty days; (c) the Index Provider shall obtain the prior approval of the Board in case of any change in control; (d) the Index Provider shall at all times maintain the minimum net worth as specified in sub-regulation (b) of regulation 5 of these regulations and submit an audited net worth certificate from a statutory auditor on a yearly basis by the thirtieth day of September for the preceding financial year. Procedure where certificate is not granted 11. (1) If after considering an application made under regulation 4, the Board is of the opinion that a certificate of registration shall not be granted, it may, after giving the applicant a reasonable opportunity of being heard, re....
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....ersight committee shall be separate and distinct from the department dealing with the day-to-day process of Index calculation and maintenance. (4) The oversight committee shall: (a) Review the need for change in the Index design or computation methodology due to changes in the market dynamics or for any other reason and evaluate the proposed approach for the change, if any, along with its impact on the existing subscribers or clients; (b) Oversee benchmark design and introduction of new financial benchmarks, results of audit and direct implementation of remedial actions recommended by those audits; (c) Review procedures for cessation of an Index; (d) Oversee standard procedures followed in the exercise of Expert Judgement; (e) Periodically review the conditions in the underlying interest which the Index measures to determine whether the interest has undergone structural changes that might require changes to the design of the methodology; (f) Examine whether the methodology appropriately reflects the nomenclature and description of the Index and whether the Index is true to label. Conflic....
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....he following components: (a) Policies and procedures as specified under 'Conflict of Interest'; (b) Robust processes and a methodology document for calculating and maintaining the Index and the methodology document which shall include a scenario where discretionary judgement could be exercised in connection with rebalance decisions or the revision of constituents or both within Indices; (c) Robust mechanism to ensure clear accountability and effective complaint management; (d) Sound framework for documenting, maintaining and testing business continuity and recovery procedures; (e) Training to all employees including the employees of the entities which have co-developed the Index or Benchmark or of third parties involved with benchmark determining process on ethics and conflicts of interest on a periodic basis; (f) A framework addressing the protection of sensitive information and trading restrictions mentioned under 'Conflict of Interest'. CHAPTER IV INDEX QUALITY AND METHODOLOGY Quality of the Index 18. (1) The Index design shall take into account factors which result in a representation of the underlying inte....
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....y in the dissemination of information about changes in Index constituent of the Indices, shall frame guidelines in its methodology document addressing time frames for changes to Index constituents by allowing sufficient time for implementation. (3) The Index Provider shall; (a) endeavour to seek market feedback, if required, for making significant changes to the Index methodology; (b) review the methodology for an Index on a periodic basis and propose to make changes, if necessary, to adhere to its objective; (c) consult and discuss the change in methodology with stakeholders including the market participants, subscribers before implementing the change in methodology; and (d) provide advance notice of the implementation of the proposed change in the methodology. Cessation of Index 20. (1) An Index Provider shall formulate policies and procedures to address the need for possible cessation of an Index taking into account the estimated impact on Market Participants and Subscribers. (2) The Index Provider shall provide reasonable notice and intimate in advance the subscribers about the cessation of an Index. (3) Wherever reasonably pra....
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.... Any subscriber to an Index Provider shall have recourse to grievance redressal under these regulations. Assessment by Independent Auditor 24. (1) An Index Provider shall ensure an assessment of its adherence to International Organization of Securities Commissions Principles for Financial Benchmarks at least once in two years and such assessment shall be performed by an independent external auditor with a proven record of expertise and capability: Provided that the first assessment of adherence to International Organization of Securities Commissions Principles for Financial Benchmarks shall be provided by the Index Provider within one year of the grant of certificate of registration: Provided further that where an existing entity not registered with the Board as an Index Provider has been assessed for compliance with International Organization of Securities Commissions Principles during the past one year; the next assessment by the independent external auditors shall be carried out within two years from the date of the last assessment. (2) The report of the independent external auditor shall be published on the website of the Index Provider. Submission of Report t....
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....siness as an Index provider. CHAPTER VI SPECIAL AUDIT Board's right to direct Special Audit. 31. The Board may under exceptional circumstances direct a Special Audit to be conducted for examination of the books of account, records and documents relating to an Index Provider. Obligation of Index Provider during Special Audit. 32. It shall be the duty of every officer of the Index Provider in respect of whom a Special Audit has been ordered under regulation 31 and any other associated person including the entities which have co-developed the Index or of third parties involved with benchmark determining process who is in possession of relevant information pertaining to the conduct and affairs of such Index Provider, to produce before the Special Auditor such books, accounts and other documents in their custody or control and furnish the Auditor with such statements, information and render such possible assistance and such co-operation as may be required for the purposes of the Special Audit including authenticated copies of such documents, books or accounts as may be required for the purposes of the Special Audit. Submission of report to the Boar....
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....ions and guidelines in the form of circulars. FIRST SCHEDULE FORM A SECURITIES AND EXCHANGE BOARD OF INDIA (INDEX PROVIDERS) REGULATIONS, 2024 [See Regulation 4(2)] APPLICATION FOR GRANT OF CERTIFICATE OF REGISTRATION NAME OF APPLICANT: CONTACT NAME: TELEPHONE NO: FAX NO: INSTRUCTIONS FOR FILLING UP FORM - 1. Applicants shall submit to the Board a completed application form together with appropriate supporting documents. Supporting documents shall be attested as true by a notary public. 2. This application form shall be filled in accordance with the regulations. 3. Application for registration shall be considered, only if it is complete in all respects. 4. All answers shall be typed. 5. Information that needs to be supplied in more detail may be given on separate sheets which shall be attached to the application form. 6. All signatures on the application shall be original. 7. Every page of the form as well as every additional sheet shall be initialled by the authorised signatory of the applicant. 1.0 PARTICULARS OF THE APPLICANT 1.1 Name, address of the r....
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.... in the associate, nature of interest of promoter(s) of the applicant in the associate. 6.2 Whether the Board has granted/ refused registration as Index Provider to any associate of the applicant, wherever applicable. 6.3 Give the details like date of application, date of refusal/registration, reasons for refusal etc. 7.0 BUSINESS INFORMATION OF THE COMPANY 7.1 History, major events and present activities. Details of experience in Index Provider related activities. 7.2 If the company is proposing to undertake the activity as an Index Provider for the first time, business plan of the company with projected volume of activities and income for which registration is sought to be specifically given. 7.3 Indices Related information (for use in Indian securities market) (a) List and types of Indices offered / proposed to be offered, (b) Date of launch of 1st index (c) Detail in brief about 1st index. (d) Details of 'significant Indices' administered. (e) List and types of Indices currently used in Indian markets (f) List and types of Indices currently used globally (g) List and types of Indices In....
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.... following declarations signed by two directors: I/We hereby apply for registration. I/We warrant that I/We have truthfully and fully answered the questions above and provided all the information which might reasonably be considered relevant for the purposes of my registration. I/We declare that the information supplied in the application form is complete and correct. For and on behalf of _________________________________________________________________________ (Name of Applicant) _________________________________________________________________________ Director Director Enclosure: 1. Certificate of registration/ incorporation 2. Detailed recent report on adherence to International Organization of Securities Commissions Principles of Financial Benchmarks where compliance assessment is carried out by independent audit conducted by external professional FORM B SECURITIES AND EXCHANGE BOARD OF INDIA (INDEX PROVIDERS) REGULATIONS, 2024 [See Regulation 9(1)] [CERTIFICATE OF REGISTRATION] I. In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992, read with the r....
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....aintain objectivity and independence in the Index or Benchmark determination process. 4. An Index Provider shall have a reasonable and adequate basis for performing Index administration, with the support of appropriate and in depth research. It shall also maintain records to support its decisions. 5. An Index Provider shall have in place an administration process consistent with international standards to International Organization of Securities Commissions Principles. 6. An Index Provider shall keep track of all important changes in the market affecting the computation of Index and shall develop efficient and responsive systems to yield timely and accurate Index values. 7. An Index Provider shall disclose its methodology to their clients, users and the t public. 8. An Index Provider shall, wherever necessary, disclose to the clients, possible sources of conflict of duties and interests, which could impair its ability to make a fair, objective and unbiased determination of Indices or Benchmarks. Further it shall ensure that no conflict of interest exists between any member of its oversight committee and that of its client. 9. An Index Provider shall not make any u....