The Executive Board of SIX Swiss Exchange has adjusted the regulations governing the SMI Index Family following a market consultation and at the recommendation of the Index Commission. The weighting of the largest shares in the SMI is now to be capped at 18%. At the same time, a new index is to be launched in which the weightings continue not to be capped. The amendment to the regulations enters into effect on 18 September 2017 and is be applied subject to transitional provisions.
SIX Swiss Exchange conducted a market consultation on the regulations governing the SMI. It revealed that issuers of financial products and users of index derivatives in particular were in favor of introducing a change in the SMI's methodology that would involve the capping of the weighting of the largest shares. Shares with weightings in excess of 18% of the SMI are now to be capped at 18% at the quarterly index reviews. As soon as the weightings of two shares in the index exceed 20%, they will be reduced to 18% during the index reviews. The amendment to the regulations will enter into effect on 18 September 2017 and be applied subject to transitional provisions. These provide for a gradual reduction in the weightings of the largest index components: they will be reduced by 3% each quarter until reaching a maximum of 18% of the SMI.
The amendment to the regulations brings the SMI into line with the diversification limits stipulated by the ESMA – UCITS Directive and permits it to be used as a reference index for the Swiss equity market and European Union.
The consultation also revealed that some users continue to require a non-capped index. SIX Swiss Exchange is consequently launching a new index in conjunction with the regulatory amendment. While its composition will correspond to that of the SMI, it will not be subject to capping.
