Facts for Prelims (FFP)
Source: BS
Context: The Securities and Exchange Board of India (Sebi) mandates the registration of index providers managing “significant indices” based on Indian securities to enhance transparency in financial benchmark governance.
What are Indices?
Indices are statistical measures used to track the performance of a group of assets or securities in a particular market. They serve as benchmarks or indicators for investors to assess the overall performance and trends of a specific segment of the market. Indices are often composed of stocks, bonds, commodities, or other financial instruments, and they provide a way to monitor the ups and downs of various sectors or the entire market.
Common examples of indices include the Sensex, Nifty 200(India); S&P 500, Dow Jones Industrial Average, and NASDAQ Composite in the United States, which track the performance of large-cap stocks traded on major exchanges.
What does the regulation Say?
- The regulations require index providers like NSE Indices and Asia Index (AIPL) to register with Sebi, along with making their methodology documents public and adhering to a code of conduct.
- Global index providers such as MSCI, Nasdaq, and FTSE Russell may not need to register unless their indices are widely used by domestic asset managers.
