Sebi Proposes New Financial Threshold for Index Regulation
The Securities and Exchange Board of India has put forward a new proposal. This proposal aims to determine which market indices will come under its regulatory oversight. Sebi released a consultation paper on Monday to outline this plan.
Defining Significant Indices
Sebi wants to designate certain indices as significant. An index will be considered significant if domestic mutual fund schemes track it or use it as a benchmark. The cumulative assets under management for these schemes must exceed twenty thousand crore rupees.
These significant indices will then fall under the Index Provider Regulations introduced in 2024. The regulator stated this move aims to improve transparency. It also seeks to enhance accountability in the governance and administration of indices.
Calculation Methodology
The market watchdog has recommended a specific method for computing cumulative AUM. This method involves using the daily average AUM of domestic mutual fund schemes. The calculation will cover each month over the preceding six months.
Assessments will occur twice every year. They will take place as of June thirtieth and December thirty-first. If a mutual fund scheme tracks more than one index, only the portion of AUM attributable to each index will count.
For an index of indices, AUM tracking the underlying indices will be included. This inclusion will happen in proportion to their respective weights.
Industry Perspective
D.P. Singh, deputy managing director and joint chief executive officer at SBI Mutual Funds, shared his views. He said some schemes like thematic schemes cater to specific investors. These schemes may not benchmark significant indices. Sebi has introduced this framework to make that distinction clear.
Finalizing the Proposal
Sebi finalized the proposed threshold and calculation methodology after internal discussions. The regulator also held talks with the Association of Mutual Funds in India. Applying this methodology to mutual fund AUM data from January first to June thirtieth, 2025, revealed forty-seven significant indices.
These indices span equity, debt, and hybrid categories. BSE Index Services, NSE Indices, and CRISIL administer them. Widely tracked benchmarks like the BSE Sensex and Nifty 50 are included. The list also features Nifty Bank, Nifty 500, BSE 500, and several sectoral indices. Duration-based and money market indices appear as well.
Registration Requirements
Under the draft circular, providers of these significant indices must apply for registration with Sebi. They will have six months to do so after the circular issues. This requirement does not apply to index providers whose significant indices the Reserve Bank of India regulates. Benchmarks notified by the central bank are exempt.
Grievance Redressal
Sebi clarified the grievance redressal mechanism under the Index Provider Regulations. This mechanism will apply only to significant indices offered by registered index providers. Subscribers to such indices can access grievance redressal under the Sebi framework.
Public Feedback
The regulator has invited public comments on the consultation paper. The deadline for submissions is February tenth, 2026.
