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TMI BlogSecurities and Exchange Board of India (Index Providers) Regulations, 2024.X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. 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 exclusion of data, analysis and identities of submitters of information used in the benchmark setting process for an appropriate period; (d) "Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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 means by which such notice is made, is proportionate to the breadth and depth of the use of Benchmark by the Stakeholders, as determined by the Index Provider on a "best effort" basis. Explanation: Document or notice published on the website of an Index Provider shall ordinarily be considered as compliance with this requirement; (q) "Regulated Market or Exchange" means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn 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 if it has made an application for registration under sub-regulation (2) within the said period of six months, till the disposal of such application: Provided further that 'Benchmarks' in the financial markets regulated by the Reserve Bank of India including the 'Significant Benchmarks' notified by the Reserve Bank of India under section 45 W of the Reserve Bank of India Act, 1934 (2 of 1934) shall be excluded from the purview of these regulations. (2) An application for the grant of a certificate under sub-regulation (1) shall be made to the Board in Form A of the First Schedule and shall be accompanied by a non-refundable application fee, as specified in Part A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (Intermediaries) Regulations, 2008: Provided that, where the promoter of an Index Provider is a stock exchange, clearing corporation or depository, the criteria for determining the fit and proper status of an Index Provider shall be as per the fit and proper criteria specified in Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 and the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018. Application to conform to the requirements 7. Any application for a certificate, which is not complete in all respects or does not conform to the requirement of regulation 5 or instructions specified in Form A of the First Schedule shall be rejected by the Board: Provided that before rejecting any such application, the applicant shall be given an opportunity to remove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, reject the application. (2) The decision of the Board, to reject the application under sub-regulation (1) shall be communicated to the applicant within a period of thirty days of such decision, with grounds for not accepting the application. CHAPTER III GOVERNANCE AND CONFLICT OF INTEREST Code of Conduct 12. Every Index Provider shall abide by the Code of Conduct specified in the Third Schedule of these regulations. Governance 13. The Index Provider shall have appropriate governance arrangements in place in order to protect the integrity of the benchmark determination process, mitigate conflict of interest and segregate the persons responsible for index governance from the persons responsible for commercializing the Indices. Responsibilities 14. (1) The Index Provider shall bear the primary responsibility for all aspects of its benchmark determination process such as the development, calculation and maintenance of an Index and establishment of credible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects the nomenclature and description of the Index and whether the Index is true to label. Conflict of Interest 16. (1) The Index Provider shall formulate policies and procedures to manage conflict of interest and protect the integrity and independence of the various functions performed in connection with the determination of its Indices. (2) The Index Provider shall document, implement and enforce these policies and procedures for identification, disclosure, management, mitigation or avoidance of conflict of interest. (3) The Index Provider shall formulate policies that prevents personal interest or business connections from compromising or conflicting with the performance of its functions, put in place effective procedures to control the exchange of information amongst the staff engaged in the activities involving any potential risk of conflict of interest, require its employees to comply with applicable laws and regulations and that protects confidential and material non-public information: Provided that such policies shall apply to individuals responsible for any aspect of the oversight function with respect to the Indices as well as to those individuals engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dex 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Index Provider shall maintain the Index for a reasonable period of time and if feasible, shall also provide an alternative Index within a reasonable timeframe: Provided that the subscribers registered with the Board and tracking the Indices of existing Index Providers who administer Significant Indices, but who are not desirous of seeking registration with the Board or who intend to cease publication of an index or benchmark, shall shift to a new benchmark offered by a registered Index Provider or cease to track the Indices and take all necessary and consequential steps in this regard within a time period of three months of notice of such intent of cessation. Internal Controls over Data Collection 21. (1) An Index Provider shall maintain internal controls to address the processes for selection of data sources and data Submitters, for data collection and for the protection of data integrity and its confidentiality. (2) The Regulated Markets and Stock Exchanges shall ensure equal, unrestricted, transparent and fair access of data to all the Index Providers who have entered into a data sharing agreement with them and shall disseminate data without any bias or preference towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernational Organization of Securities Commissions Principles for Financial Benchmarks assessed by independent external auditor. Maintenance of Books of Accounts, records etc. 26. (1) The Index Provider shall maintain written records, audit trails, records related to input data employed in benchmark determination and minutes of meeting of oversight committee for a minimum period of eight years. (2) The Index Provider shall intimate to the Board the place within India, where all the books of account, records and documents required to be maintained under these regulations are being maintained. Compliance with guidelines, circulars issued by the Board 27. The Index Providers shall comply with such guidelines and circulars as may be issued by the Board from time to time. Website 28. Every Index Provider shall maintain a functional website publishing such information as may be specified by the Board and an official email address. Appointment of Compliance Officer 29. (1) Every Index Provider shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines and circulars issued by the Board. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovider. 34. The Board may after consideration of the Special Audit Report, communicate such findings of the Special Audit report to the Index Provider and provide reasonable opportunity of hearing to the Index Provider. Action on audit report. 35. The Board shall after consideration of the response of the Index Provider on the Special Audit Report, take such action as the Board may deem fit and appropriate including action under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. CHAPTER VII ACTION IN CASE OF DEFAULT 36. An Index Provider who contravenes any of the provisions of the Act, Rules, or Regulations framed thereunder shall be liable for action under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 or the relevant provisions of the Act and the regulations made thereunder. CHAPTER VIII MISCELLANEOUS Exemption from strict enforcement. 37. (1) The Board may suo motu or on an application made by an Index Provider, for reasons recorded in writing, grant relaxation from the strict enforcement of any of the provisions of these regulations, subject to such conditions as the Board deems fit to impose in the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) Unlimited company. If listed, names of Stock Exchanges and latest share price to be given. 1.4 Category to which the Applicant company belongs to (refer regulation 4) (a) Company already in the business as Index Provider 2.0 ELIGIBILITY CRITERIA 2.1. Net worth of the company as per the last audited accounts not earlier than three months from the date of application [refer regulation 5 (b)]. Enclose a certificate by Chartered Accountant/Certified Public Accountant certifying the same. 3.0 PARTICULARS OF DIRECTORS/KEY PERSONNEL 3.1 Particulars of Directors of the company, which shall include name, qualification, experience, shareholding in the company and directorship in other companies. 3.2 Particulars of Key Personnel of the company, which shall include the name, designation in the company, qualification, previous positions held, experience, date of appointment in the company and functional areas. 4.0 INFRASTRUCTURE 4.1 Details of infrastructure including computing facilities, facilities for research and database available with the company and whether the existing infrastructure is adequate Any further plan for additional/ improved infrastructure to be indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to the preceding year of the current year Preceding year Current year (a) Paid-up capital (b) Free reserves (excluding revaluation reserves) Total (a) + (b) (c) Accumulated losses (d) Deferred revenue expenditure not written off. Net worth (a)+(b)- (c)-(d) 9.2 Enclose audited annual accounts for the last three years. Where unaudited reports are submitted, give reasons. If minimum net worth requirement has been met after last audited annual accounts, audited statements of accounts of a later date shall also be submitted. 9.3 Name and Address of the Principal bankers of the Applicant company. 9.4 Name and address of the Auditors. 10.0 OTHER INFORMATION 10.1 Details of all pending litigations against the applicant company, directors and employees: Nature of dispute Name of the party Status 10.2 Indictment or involvement in any fraud or economic offences by the applicant or any of its Directors or Key Managerial Personnel, in the last three years. 11.0 DECLARATION 11.1 Give the 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough NEFT/RTGS/IMPS or online payment using the Securities and Exchange Board of India payment gateway or any other mode as may be specified by the Board from time to time 4. The recurring registration fee payable every three years as specified under item no. 3 of Part A, shall be paid by the Index Provider one month before the expiry of the block for which the fee has been paid. THIRD SCHEDULE SECURITIES AND EXCHANGE BOARD OF INDIA (INDEX PROVIDERS) REGULATIONS, 2024 [See Regulation 12] CODE OF CONDUCT FOR INDEX PROVIDERS 1. An Index Provider, shall observe high standards of integrity and fairness in the conduct of its business. 2. An Index Provider shall fulfil its obligations in a prompt, ethical and professional manner. 3. An Index Provider shall at all times exercise due diligence, ensure proper care and exercise independent professional judgement in order to achieve and maintain 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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