Sebi proposes to regulate index providers of Sensex, Nifty
New Delhi: Markets regulator Sebi on Wednesday proposed new norms to regulate index providers entities which design and develop benchmark indices such as Sensex and Nifty.
The index operators, which include subsidiaries of stock exchanges and independent entities such as S&P, currently do not come under Sebi's direct regulatory purview.
The proposed new norms include a code of conduct for index operators, while mandating more disclosures and greater transparency when including or excluding a stock from the indices.
Besides, the proposed measures would address issues like avoiding conflict of interest, creation of a robust audit mechanism and a whistle-blower framework to facilitate early detection of potential misconduct.
These suggestions are in line with International Organisation of Securities Commissions (IOSCO) principles which are globally accepted standards for index providers.
The Securities and Exchange Board of India (Sebi) has sought comments from public till June 20 on the proposed norms and final regulations will be put in place after taking views of all stakeholders into consideration.
In a discussion paper, Sebi said that an index provider should have appropriate governance arrangements in place in order to protect the integrity of the index administration process, mitigate conflicts of interest, and segregate those responsible for index governance from those responsible for commercialising the indices by implementing appropriate firewalls and employing separate reporting lines for each function.
Sebi has suggested that the index provider should have an oversight function for all aspects of the index administration process. The function should be separate and distinct from the direct day-to-day process of index calculation and maintenance and, as such, be independent of the actual index calculation process.
To raise commodities derivatives awareness
Markets regulators Sebi on Wednesday said it has formulated a scheme to spread awareness about commodities derivatives among farmers, manufacturers and cooperative groups.
Under the scheme, eligible entities interested in conducting commodities awareness programmes can approach Sebi for recognition and these entities can impart education in the field of commodity derivatives on topics such as forward or futures contracts, hedging and risks, among others.
"The aim of the scheme is to reach the farmers/ producers, farmers cooperatives/ groups in various parts of the country," Securities and Exchange Board of India (Sebi) said. The recognised Commodities Derivatives Trainers (CoTs) are expected to organise programmes in small towns and rural areas in order to provide easy access to farmers as well as their associations; and other stakeholders such as hedgers, traders, processors, exporters, importers and consumers.
Spelling out the eligibility criteria for CoTs, Sebi said that applicants should be a trust, society, company, NGO and institution in the field of education/other developmental/ ancillary activities pertaining to commodity derivatives.
Among other requirements, they need to have a three-year experience in the field of commodity derivatives