NEW YORK (Reuters) - S&P Dow Jones Indices is negotiating with asset managers to license its new index, which it says represents companies that focus on the long term rather than the current quarter.

A specialist trader is reflected in a screen at his post on the floor of the New York Stock Exchange, August 21, 2015. The S&P 500 suffered its biggest daily percentage drop in nearly four years on Friday as fears of a China-led global slowdown continued to rattle investors. REUTERS/Brendan McDermid

The Long-Term Value Creation Global Index .SPLTVCUN could be the basis for one or more mutual funds, exchange-traded funds or structured products, Vinit Srivastava, S&P's senior director of equity strategy, said in an interview last week.

S&P created the index over the past year in response to concerns that company executives, under pressure from hard-charging board overseers and the earnings calendar, have put short-term wins ahead of building businesses that thrive over time.

Designed with the help of the Canada Pension Plan Investment Board, the index consists of companies with what S&P considers strong corporate-governance plans and solid financial numbers.

“We have to do things to stop that short-term focus,” said Poul Winslow, managing director at Toronto-based CPPIB. He said the index relied on a scoring system that draws out important details about how companies are governed.

The CPPIB and other institutional investors have committed $2 billion to private funds tracking the index.

S&P, a unit of McGraw Hill Financial Inc MHFI.N and the largest provider of indexes tracked by U.S.-listed ETFs, has not decided whether such a license would be exclusive to one asset manager.

Srivastava declined to name any bidders or comment further on the discussions. Bringing such a product to market could take several months of planning and regulatory approvals.

Asset managers have already had something of a hand in the effort. Focusing Capital on the Long Term, a group that advocated for the index and was founded by CPPIB and management consultant McKinsey & Co in 2013, counts senior management from fund-managing companies BlackRock Inc BLK.N and State Street Corp STT.N among its members and advisers.

DEFINING LONG-TERM

To come up with its index, S&P starts with the largest public companies and allocates money to those that produce a hefty return on equity and seem to develop strong policies on legal compliance, environmental reporting and philanthropy. Such practices, advocates like Winslow said, can predict performance better than balance sheets.

Among the top companies in the index are health insurer Cigna Corp CI.N, coffee chain Starbucks Corp SBUX.O and industrial conglomerate 3M Co MMM.N.

However, the index does not screen out companies that spend cash buying back their own shares, even though such repurchases have been criticized by investors who would rather see the money go to long-term ventures like capital expenditures or workforce development.

One of the long-term index's top holdings, retailer O'Reilly Automotive Inc ORLY.O, is also one of the largest components of the S&P 500 Buyback Index .SPBUYUP.

Srivastava said companies with good governance rules tend to do buybacks “for the right reasons.”

The index’s focus on corporate governance does not necessarily mean a focus on social issues, even though pension funds often consider such criteria.

Two of the index's top 10 holdings are tobacco companies Reynolds American Inc RAI.N and Altria Group Inc MO.N, which socially conscious investors often screen out.