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FTSE understands that investors need an objective and consistent approach to the categorisation of markets as Developed, Advanced Emerging, Secondary Emerging or Frontier status within global benchmarks. To ensure that the classification of markets within the FTSE Global Equity Index Series (GEIS) remains accurate and up-to-date, FTSE works closely with both the institutional investor community and domestic market authorities to review individual countries’ classification status regularly.
Using a range of criteria which was developed in conjunction with international investors, FTSE conducts an annual review of the market status of all countries contained in its global benchmarks and assigns them to Developed, Advanced Emerging, Secondary Emerging or Frontier categories. This process ensures that FTSE GEIS contains the most relevant and accurate information about market structure, offering investors risk management insight into the regulatory and trading practices of the markets included in the global and regional indices they track.
In order to ensure that the potential reclassification of countries is transparent to investors, FTSE creates an annual Watch List containing countries that may be subject to a change in their classification. Countries on the Watch List are reviewed for possible classification changes by the FTSE Policy Group each September. A full list of countries currently on the Watch List, and the results of the 2013 Interim Update can be viewed in the March 2013 Country Classification Update.
In the event that Greece exits the eurozone, a number of FTSE indices and other services will be affected. FTSE will work to maintain the integrity of its data and to enable clients to use its indices and other services with the highest level of confidence as soon as possible after any announcement. This document answers some of the questions you may have regarding FTSE’s response to this situation.