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Index Education - Ch3 Intro

A framework for index integrity

Index governance refers to the systems or procedures that provide oversight of the design, calculation, and maintenance of indexes.

We believe that a solid governance infrastructure is essential to protect the integrity of the index construction and maintenance process, and to address conflicts of interest. It helps us deliver indexes that are relevant and may be used as the basis for financial products.

Principles for consistency, independence and transparency

We have identified five key index governance principles:

  • Expert-led decision-making committees. Their focus is to prevent decisions being made unilaterally and to ensure consistency with published methodologies and policies.
  • Committees staffed by MSCI employees. Their goal is to retain editorial and operational independence.
  • An announcement policy. This policy is designed to prevent selective disclosure of index related decisions. Actions are communicated to market participants in a timely manner.
  • Publicly available, rules-based methodologies. They aim to provide transparency and avoid the implementation of undefined, ad-hoc index rebalancing or “stealth” methodology changes.
  • A robust consultation process. This is designed to reflect broad views and maintain the evolution of the indexes with the evolution of views of market participants.

Committees that provide oversight

Our index governance framework is based on a committee structure. The committees are staffed by MSCI employees and each focuses on a specific area of oversight. From risk & regulatory compliance to new methodology and methodology developments.

The role of our internal committees is to ensure that decisions are not made unilaterally and that all sides of an issue are fully explored before decisions are made final. Their role is also to ensure that decisions are made in accordance with index methodologies and policies.

Our approach to index governance is built on transparency and independence. This is critical to objectivity, efficiency and avoiding conflicts of interest.


Index Education Audio Series

Our index audio series

Listen to the voice of index experts across MSCI.


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Index Governance (03:07)

In this episode, we focus on the key aspects of index governance and MSCI’s approach to protecting the integrity of indexes.

Index Education - Ch3 Intro 2

Conclusion

To enable indexes to effectively be used as the basis for financial products, MSCI implements a governance process. It is designed to protect the integrity of the index construction and maintenance processes, while addressing any potential conflicts of interest.


Index Education - Learn more about indexes

Learn more about indexes


Index Education - Chap 3 - enhanced cards

Making the Complex Simple: Indexes explained

Indexes play a crucial role when it comes to investing.

Back to Overview
What Are Indexes
Chapter 1: Learn the basics about indexes

Indexes measure the performance of a market and enable investors to better understand the collective movement of a group of stocks, bonds or other security types.

Read Chapter 1
How Are Indexes Constructed
Chapter 2: The rules, definitions and calculations

The construction of indexes is typically based on a variety of rules and principles. They determine how an index functions and performs.

Read Chapter 2
The Expansion of Indexes
Chapter 4: A closer look at newer types of indexes

Advances in technology and data availability have led to newer, more granular types of indexes.

Read Chapter 4
New Uses of Indexes
Chapter 5: Explore the potential of indexes

As new investors enter the market and financial products continue to evolve, we are seeing new and expanding uses for indexes.

Read Chapter 5

Index Education Chap 3- related content cards