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FTSE ST Index Series Methodology Update: Fast Entry and Quarterly Review 29 October 2012 |
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At the September 2012 meeting, FTSE ST Advisory Committee approved that IPOs which qualify for fast entry to the STI and FTSE ST Indices will be included in the index after the close of the fifth day of trading. Please note the following change to the ground rules with immediate effect: Current Rule 6.1 New Issues 6.1.1 If, in the view of the FTSE ST Advisory Committee, a new issue is so large (i.e. its full market capitalisation amounts to 2% or more of the FTSE ST All-Share Index, before application of individual constituent investability weightings) that the effectiveness of the index as a market indicator would be significantly and adversely affected by its own omission, FTSE will normally decide to include the new issue as a constituent of the STI and remaining FTSE ST Indices that it qualifies for after the close of business on the first day of official trading. Therefore the lowest ranking constituent in the STI will be removed and included in the FTSE ST Mid Cap Index and placed in the Reserve List for the STI. The lowest ranking constituent in the FTSE ST Mid Cap Index will be removed and then included in the FTSE ST Small Cap Index and placed in the Reserve List for the FTSE ST Mid Cap Index. In all cases, advance notification confirming the timing of the inclusion of the new constituent will be given accordingly. New Rule 6.1 New Issues 6.1.1 If, in the view of the FTSE ST Advisory Committee, a new issue is so large (i.e. its full market capitalisation amounts to 2% or more of the FTSE ST All-Share Index, before application of individual constituent investability weightings) that the effectiveness of the index as a market indicator would be significantly and adversely affected by its own omission, FTSE will normally decide to include the new issue as a constituent of the STI and remaining FTSE ST Indices that it qualifies for after the close of business on the fifth day of trading and eligibility will be determined using the closing price on the first day of trading. In all cases, advance notification confirming the timing of the inclusion of the new constituent will be given accordingly. Therefore the lowest ranking constituent in the STI will be removed and included in the FTSE ST Mid Cap Index and placed in the Reserve List for the STI. The lowest ranking constituent in the FTSE ST Mid Cap Index will be removed and then included in the FTSE ST Small Cap Index and placed in the Reserve List for the FTSE ST Mid Cap Index. In the event that the fifth day of trading is in close proximity to an index review, FTSE may use its discretion to include a fast entrant at the index review date following advance notice. In addition, FTSE ST Advisory Committee also approved the introduction of new quarterly reviews in June and December to rebalance the size categories of All-Share constituents and the inclusion of eligible new issues that meet eligibility criteria. Fledgling constituents will continue to be reviewed in March and September only. The first quarterly review will be in December 2012. The following is taken from the ground rule update for illustration purposes: 5.1.3 The table below describes the review process during the review dates:
* Review size categories of All-Share constituents, as well as new issues eligibility to enter the FTSE ST Index Series For the full updated version of the FTSE ST Index Series Ground Rules, please refer to the FTSE website, www.ftse.com/Indices/ FTSE_ST_Index_Series
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