SEBI Registered Index Provider: Key Steps and Considerations in India

Setting up as a SEBI registered Index Provider in India involves several key steps and considerations. An Index Provider oversees the creation, operation, and administration of financial benchmarks or indices used in products like mutual funds and ETFs. To register with SEBI, entities must meet eligibility criteria including infrastructure, governance standards, and appointing a compliance officer. Applicants’ promoters and directors need to meet SEBI’s “fit and proper” criteria, ensuring integrity and competence. Index Providers are accountable for index accuracy and transparency, maintaining a robust control framework and disclosing methodology publicly. The process also includes financial requirements such as a net worth of 25 crores and statutory fees, including SEBI application and registration fees.

SEBI Registered Index Provider: Key Steps and Considerations in India

Setting up of SEBI registered Index Providers entity in India: 

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.

Applicability: apply to all Index providers offering indices used in India for financial products, including mutual funds, ETFs, and derivatives.

Registration of Index Providers

• All entities intending to offer indices in India must be registered with SEBI.
• The application for registration must be accompanied by a fee and include detailed information about the applicant.

Eligibility Criteria

• The applicant must be a company or body corporate.
• They should have the necessary infrastructure, expertise, and resources to operate as an Index Provider.
• The applicant must have a robust governance structure in place.
• Required minimum one Indian resident director
• Promoters from land sharing country of India need to take prior approval from MHA
• Shall appoint a compliance officer

Criteria for Fit and Proper Person

• The applicant’s promoters, directors, and key management personnel should meet the “fit and proper” criteria as prescribed by SEBI.
• This includes integrity, reputation, financial soundness, and competence.

Responsibilities

• Index Providers are responsible for the accuracy, integrity, and reliability of their indices.
• They must ensure transparency in index construction and maintain a publicly available methodology.
• Index Providers should address conflicts of interest and maintain confidentiality.

Control Framework

• Index Providers must establish a control framework to manage risks associated with index administration.
• This includes regular reviews and audits of their processes and methodologies.

Index Quality and Methodology

• Indices must be constructed using a transparent and objective methodology.
• The methodology should be publicly disclosed, including criteria for index inclusion, rebalancing, and adjustments.
• Index Providers should regularly review their methodology and make updates as necessary.

Accountability and Disclosures

• Index Providers must provide regular disclosures on the performance and composition of their indices.
• They are accountable for any discrepancies or errors in their indices.
• Any significant changes in methodology must be disclosed to the public in advance.

Net worth and fees Requirements for SEBI registered Index Providers entity:

1. Net worth requirements: 25 crores

2. SEBI & other Statutory fees as follows:

#1 USD = RS. 83