Regulation 18 - Quality of the Index - Securities and Exchange Board of India (Index Providers) Regulations, 2024

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 interest that the Index seeks to measure and shall also seek to eliminate factors that the Index Provider believes might result in a distortion of the price, rate or value of that Index. (2) The Index Provider shall calculate an Index, using data, that is sufficient to represent the underlying interest measured by the Index. (3) An Index Provider shall establish and make available in public the guidelines regarding the data inputs and the manner in which such data is used for the calculation and maintenance of an Index. (4) An Index Provider shall use inputs consistent with the approach to ensure quality, integrity and continuity of its Index calculations and maintenance as set out in the Index Methodology. (5) (a) An Index Provider may obtain submissions from across a wide universe of market segments and shall perform due diligence on its Data Submitters; (b) An Index Provider shall formulate a Code of Conduct for Data Submitters to address quality, oversight, conflict of interest management, record-keeping and whistleblowing which shall be published on website of index provider: Provided that the requirement of framing a Code of Conduct shall not be required for Indices based on transaction data of the Regulated Markets and Stock Exchanges. (6) (a) An Index Provider shall make the Methodology documents available in public to facilitate an understanding of the manner in which the Index seeks to measure the interest and the manner in which the Index is calculated and maintained. (b) The Index Provider shall put in place guidelines in cases when the Index Provider uses Expert Judgement to maintain an Index. (c) An Index Provider, shall provide guidelines specifying the timing of announcements for changes to the Index constituents including replacement of constituents in the Indices in its Methodology document in order to bring about the transparency in the dissemination of information about changes to Index constituents.