The US SEC is exploring whether to impose stricter rules on index providers that guide trillions of dollars of investments globally, according to a report by FT on Thursday.
SEC formally requested information from the market on whether to impose stricter rules on companies like S&P Global, MSCI, and FTSE Russell, currently categorized as data publishers.
The proposed changes would mean the index providers would be categorized as investment advisors and held to the same regulation as fund managers.
Gary Gensler, Chair of SEC, stated that the role of index providers in today’s markets raises critical questions under the securities laws as to whether they offer investment advice rather than merely information.
These companies have gradually grown into some of the most influential and profitable companies on Wall Street. They compute over 3M performance benchmarks globally for stocks, bonds, and other securities, followed by low-cost tracker funds.
Some academics have questioned the lack of certain US regulations covering index providers, noting they were effectively unregulated investment advisors. SPGI down -2.06%, MSCI down -4.74%