The Securities and Exchange Board of India (Sebi) on Saturday decided to introduce a regulatory framework for index providers which license ‘significant indices’ as it sought to bring in transparency and accountability in governance and administration of financial benchmarks in the securities market.

This was one of the four key proposals passed by the Sebi board at its meeting on Saturday.

The regulator relaxed the minimum issue size that not for profit organisations can raise through the social stock exchange (SSE). It also approved the creation of a regulatory framework for facilitation of small and medium sized REITs (real estate investment trust).

Addressing a press conference, top Sebi officials hinted that the proposed regulatory framework for index providers will exclude overseas indices such as MSCI.

Sebi chairperson Madhabi Puri Buch said the regulatory framework will be notified by Sebi based on objective criteria. Further, the proposed framework will be in accordance with IOSCO Principles for Financial Benchmarks. It will, however, be applicable only to significant indices.

While Buch did not elaborate on whether a specific amount would be fixed for such significant indices, she did indicate that it will based on the assets under management (AUM) that are benchmarked to these indices.

The market regulator is likely to bring those index providers where ‘significant money’ is following their indices under the framework.

“If there is an index which is constructed on Indian securities that are listed in the Indian securities market and that index is used by Indian investors then we will have a say,” Amarjeet Singh, wholetime member of Sebi said.

In a bid to encourage fund raising by the SSE (both BSE and NSE have such platforms), Buch disclosed that the Sebi board has decided to reduce the minimum issue size for public issuance of Zero Coupon Zero Principal Instruments (ZCZP) by non-profit organisations. The minimum size for issuing these instruments on the SSE has been reduced from Rs 1 crore to Rs 50 lakh.

Further, the market regulator also lowered the minimum application size for public issues of ZCZP on the SSE from Rs 2 lakh to Rs 10,000, thereby enabling wider participation of subscribers including retail investors.

On REITs, the board approved amendments to Sebi (Real Estate Investment Trusts) Regulations, 2014, to create a regulatory framework for facilitation of SM (small & medium) REITs with an asset value of at least Rs 50 crore compared with the minimum asset value of Rs 500 crore currently for existing REITs.

Another decision taken by its board was to strengthen investor protection in Alternative Investment Funds (AIFs).

Here Sebi said all the fresh investments made by an AIF after September 2024 should be held in demat form. The regulator disclosed that the mandate for the appointment of custodians should be extended to all AIFs. Currently, the requirement applies to schemes of Category III AIFs and schemes of Category I and II AIFs with a corpus of more than Rs 500 crore.