Beneath the revised framework, the highest constituent’s weight can not exceed 20%, whereas the mixed weight of the highest three shares should be capped at 45%.
The brand new norms, issued via a round underneath Part 11 of the SEBI Act, apply to widespread non-benchmark indices, together with BANKNIFTY, BANKEX, and FINNIFTY.
SEBI has additionally launched a minimal constituent requirement, mandating that every of those indices should comprise not less than 14 shares to qualify for by-product buying and selling. That is anticipated to make the indices extra diversified and reflective of the underlying sector or theme.
Consistent with the brand new guidelines, exchanges have been directed to rebalance the weights of the present constituents.
For BANKEX and FINNIFTY, full compliance is required in a single tranche by December 31, 2025. BANKNIFTY, nevertheless, has been allowed a phased implementation strategy unfold throughout 4 month-to-month intervals, with a ultimate deadline of March 31, 2026.To make sure a easy transition, SEBI has mandated that the weights of prime constituents be decreased regularly quite than abruptly. Exchanges should additionally present well timed communication to market individuals concerning the rebalancing and associated modifications.The round types a part of SEBI’s broader goal to boost the robustness, transparency, and equity of index-linked derivatives. By imposing minimal constituent necessities and capping weightages, the regulator seeks to decrease systemic focus, stop over-reliance on a number of shares, and enhance investor safety within the derivatives market.
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(Disclaimer: Suggestions, strategies, views and opinions given by the consultants are their very own. These don’t symbolize the views of The Financial Occasions)
