Membership Requirements

INDEX INDUSTRY ASSOCIATION (“IIA”)

MEMBERSHIP GUIDELINES

IIA Mission Statement:

The purpose of the IIA is to represent the global index industry and help it serve the needs and interests of investors by working with market participants, regulators, and other representative bodies.  The IIA also seeks to strengthen markets and the index industry by promoting sound business practices and advocating the highest level of ethics and integrity.

 

1.Definitions

“Academic Institution”means an academic institution which produces research on Indices;

“Associate IIA Member” means a member of the IIA which has the entitlements and obligations set out in Section 3 of these Guidelines;

“Board Decisions” means any IIA decision which must be voted on by the IIA Board as provided for in the IIA Bylaws Document;

“Executive IIA Member” means a member of the IIA which has the entitlements and obligations set out in Section 3 of these Guidelines;

“Executive IIA Member Working Group” means any working group consisting only of Executive IIA Members and which is set up by the IIA Board or the IIA Membership Committee to achieve a certain objective or produce a certain deliverable for the benefit of the IIA;

“Good Industry Practice” means in relation to any undertaking and any circumstances, the exercise of the highest degree of legal and regulatory standards, skill, diligence, prudence and foresight which would reasonably be expected from IIA Members.  This term is not meant to suggest or impose any constraints on the ability of members to compete vigorously against each other in the offering of products, pricing, or other terms to the market;

“IIA Board” means the Board of the IIA which is comprised of certain Executive IIA Members (as may be changed from time to time) and which is empowered to make “Board Decisions” as set out in the IIA Bylaws;

“IIA Board Meetings” means any meetings of the IIA Board at which Board Decisions shall be debated and voted on;

“IIA Bylaws” means the Bylaws of the IIA which sets out the operational aspects and decision making processes of the IIA as may be amended from time to time;

“IIA Member” means an Organization which has been accepted and ratified by the IIA Membership Committee either as an Executive IIA Member or an Associate IIA Member;

“IIA Membership Committee” means the committee of Executive IIA Members (as set forth in the IIA Bylaws) and which (i) considers and either accepts or rejects all applications to become an IIA Member by way of a majority vote; and (ii) sets up Executive IIA Working Groups and IIA Working Groups;

“IIA Member Meetings” means any meetings of the IIA Members;

“IIA Member Working Group” means any working group consisting of a mixture of IIA Members and which is set up by the IIA Board or the IIA Membership Committee to achieve a certain objective or produce a certain deliverable for the benefit of the IIA;

“Financial Index” means a number, calculated by reference to a theoretical collection of assets, market indicators, securities or derivatives whose absolute level or periodic difference relate to the  performance of the theoretical collection over that period;

“Financial Index Data” means the data relating to individual securities which form a Financial Index;

“Index Sponsor” is an Organization ultimately responsible for the management and governance of a Financial Index, including but not limited to drafting and updating the official rules which govern the Financial Index; deciding upon and implementing any restatements of a Financial Index which may be necessary and making decisions about what should happen to the Financial Index in scenarios which are not anticipated by the official rules which govern the Financial Index (either via an established committee process or unilaterally as applicable);

“Index Service Provider” is an Organization or individual that provides services to an Index Sponsor in relation to the provision of data, calculation, management and/or publication of Indices which are owned by such Index Sponsor;

“Organization” means a legal entity or a defined business area/section/department within a legal entity which can be clearly distinguished within the legal entity under which it operates by reference to (for example) Chinese walls or compliance policies.

2. Purpose

The purpose of these Membership Guidelines is to provide clear criteria for either (i) an Organization to become an IIA Member; or (ii) an existing IIA Member to remain an IIA Member.

3. Associate and Executive IIA Members: Qualification and Membership Entitlements

There shall be two classes of Membership, Associate and Executive:

a. Associate Membership shall be open to Index Sponsors, Index Service Providers, and Academic Institutions that do not meet the criteria for Executive Membership.

b. Executive Membership shall be open only to Index Sponsors that meet the criteria for Executive Membership set forth in sections 4 and 5, below.

c. Executive IIA Member and Associate IIA Member annual membership fees shall be as set out in the IIA Bylaws.

d. Associate IIA Membership Entitlements/Requirements:

i. attendance at  IIA Member Meetings; and
ii. participation in IIA Member Working Groups where requested to do so.

e. Executive IIA Membership Entitlements/Requirements:

i. attendance at IIA Member meetings ;
ii. eligibility for election to the IIA Board as per the IIA Bylaws;
iii. participation in IIA Member Working Groups where requested to do so; and
iv. participation in Executive IIA Member Working Groups where requested to do so.

 

4. Membership Criteria

Membership of the IIA is open to those organizations that share the goals of the IIA summarized in the Mission Statement above and which meet the following criteria:

a. The Organization must be either (i) an Index Sponsor; (ii) an Index Service Provider; or (iii) an Academic Institution;

b. Where an Organization is an Index Sponsor:

i. the Financial Indices and Financial Index Data which the Organization produces must be generally available  to license from such Organization;

 

ii. the Index Sponsor must adhere to the following principles:

1. Governance: there should be an appropriate governance structure for oversight of the Financial Index;
2. Controls: there should be an appropriate system of controls promoting the efficient and sound operation of the Financial Index process.

 

5. Interpretation of Section 4 (Membership Criteria) By the IIA Membership Committee

In interpreting Section 4, the IIA Membership Committee shall apply the following principles/tests:

a. If an Organization is primarily producing indices or data in order to facilitate launch/issuance/trading of its own financial products, then such Organization shall not be considered eligible to be an IIA Member. Examples: (i) if a “Structuring Team” in an Investment Bank produces trading strategies which are subsequently constructed as “indices” for the primary purpose of the “Trading Desk” with which that “Structuring Team” works trading swaps, then that “Structuring Team” would generally not be eligible for membership of the IIA; or (ii) if a “Fund Provider” constructs its own “indices” to use in conjunction with its own “Funds”, then that “Fund Provider” would generally not be eligible for membership of the IIA;

b. In order to be eligible to be an Executive IIA Member, the provision of widely available Financial Indices must be an Organization’s “primary business”. In considering the meaning of “primary business” the IIA Membership Committee shall take into account all relevant factors, including but not limited to: (i) size of the Organization and relative size of the number of Financial Indices produced; (ii) whether the majority of an Organization’s revenue is directly attributable to the licensing/availability of its Financial Indices; and (iii) whether the membership/clients of such Organization are market participants (eg asset managers) or primarily focussed on research and academic initiatives  (eg Universities).

c. If an Index Sponsor manages or governs its Indices in a manner which the IIA Board considers to not be in accordance with Good Industry Practice as defined above, then that Index Sponsor would generally not be eligible for membership of the IIA;

 

6. Membership Process

a. Organization contacts r.redding@att.net requesting membership application;

b. Membership application is submitted to the IIA Membership Committee for review;

c. Organization requesting membership is informed of the IIA Membership Committee’s decision by Rick Redding within a reasonable timeframe (usually within 4 weeks);

d. An applicant for membership whose application is rejected may submit a written appeal to the IIA Board via
<href=”mailto:r.redding@att.net “>r.redding@att.net
. Any appeals will be reviewed at the next IIA Board meeting.