Building a new, formal Stock Exchange Index?

Question

I'd like to find out how one can create a new index for American and global stock exchanges. I mean, may anyone create an index and get it quoted on its own? Is there any legal ground for the issue, does she/he have to take permission from SEC or any other entity? I'd be happy if someone could refer me to related laws, regulations etc...

Answer 1

Anybody can create an index, but based upon past history, no one is going to look at it. You must either be a publisher, broker, exchange or information provider and you need to be a major one at that. It will not be quoted because no one will care. It would have to fill a niche that is currently unfilled. There are no legal issues and there are no regulations unless you charge for the index and the index could be construed as advice in which case you would be required under the Investment Advisers Act to engage in a compliant contract with each separate person who sees it.

Other than if you charge money and the index could be construed as advice, there are no regulations or requirements, except standard provisions against fraud such as purposefully miscalculating an index for gain. If you do not own a newspaper however, I can pretty much guarantee your index will be ignored. Further, your index must fill a need not already filled. Considering that there are well over 100 indices out there right now, I doubt you can do it and get quoted.

Answer 2

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