Free Float Adjusted

All FTSE equity index constituents are free float adjusted in accordance with FTSE's index rules, to reflect the actual availability of stock in the market for public investment. Each FTSE constituent weighting is adjusted to reflect restricted shareholdings and foreign ownership to ensure an accurate representation of investable market capitalisation.

To provide investors with a closer representation of free float in FTSE indices, FTSE will move to use actual free float percentages from March 2013.

Following the successful adoption of actual free float in the FTSE UK Index Series on 18th June 2012, FTSE will use actual free float (rounded up to the next 1%) in all other float-weighted FTSE Indices (including the FTSE Global Equity Index Series and custom indices) with effect from 18 March 2013.

At initial implementation, the free float will move to actual float (rounded up to the nearest 1%) unless the actual float is within a 3% buffer of the constituent’s current banded float. Subsequent changes to free float will be made following corporate events and at quarterly reviews if the rounded free float has moved by more than 3 percentage points above or below the existing rounded free float.

Why the change?

The current free float bands used in FTSE indices can induce unnecessary turnover when securities move through the buffer separating one free float band from the next as a result of changes to a company’s shareholder structure or following corporate actions such as mergers and spin-offs. In certain circumstances, for example the rescue of financial institutions through government injections of equity capital during the financial crisis, FTSE sought to limit this turnover by applying precise free float numbers as an exception to existing rules.

Subsequent to the financial crisis, FTSE announced a market-wide consultation on potential changes to the free float banding system. The consultation showed a preference to move to actual free floats (rounded up to the nearest 1%).

Implementing the Change

Revised Index Review Timetable

To minimise aggregate turnover resulting from the adoption of actual free float, the scheduled index review timetables was revised. Please see the technical notices in the links below and the FAQ Document for further information.

Indicative Free Float Figures

To ensure transparency in the free float figures that will be used, FTSE made indicative free floats available in advance to subscribing clients. The first indicative free float figures were published in October 2012.

The indicative free float numbers were revised in the period up to and including 30 December 2012. The final confirmed actual free float numbers were published on 31 December 2012 at which point no further revisions will be made (other than as a direct result of corporate actions).

Updates made to the indicative figures in response to information received following their publication will be made at regular intervals to subscribing clients.

Indicative Reviews

In order to provide greater transparency during the lead-up to the FTSE Global Equity Index Series regional reviews, re-scheduled to coincide with the free float changes in March 2013, ‘Indicative’ reviews were made available for each regional index review on the FTSE website on 15 November 2012 and 19 December 2012. For more information about the ‘indicative’ reviews please view the FAQ document.

The relevant technical releases can be viewed on the links below.

18 June 2012 Technical Notice - Free Float Methodology Change
26 July 2012 Technical Notice - Index Review Timetable & Free Float Methodology Change
29 August 2012 Technical Notice - Index Review Timetable & Free Float Methodology Change - Update
31 October 2012 Technical Notice - ‘Indicative’ Actual Free Float

For more information about this change and the transition to actual free float, please view the FAQ document.