In a new consultation paper, SEBI and stock exchanges are seeking public feedback on how to implement new eligibility criteria for derivatives on non- benchmark indices. The existing criteria, require a minimum of 14 constituents, with the top constituent’s weight at 20% or less and the top three combined at 45% or less. This paper evaluates two primary approaches: creating new indices that meet the criteria (Alternative A) or adjusting the constituent structure and weights of existing indices (Alternative B). While some passive funds track existing indices like the Nifty Bank and Nifty Financial Services, market participants, including NSE, favour Alternative B to preserve liquidity and avoid investor confusion. It proposes a phased “glide path” for implementation, especially for indices with significant assets under management (AUM) like the Nifty Bank, to ensure an orderly transition and minimize market disruption. The comments/ feedback from stakeholders are invited.