As of June 24, Deutsche Börse is changing the basis for the calculation of all of its equity indices to free float. The preliminary figures were released by Deutsche Börse on Wednesday; the final figures based on Friday's Xetra closing prices will be published at the Deutsche Börse Web site on Saturday.
With the changeover to a free-float basis, the weight of a company in an equity index is measured according to the number of freely tradable shares, the so-called free float. Up to now, a company's weight in an index was based on the total number of all shares admitted to trading. At the same time, Deutsche Börse will now consider only one class of share in the weighting of companies, either preferred or ordinary.
The free-float criterion will make the selection of companies in the equity indices and the weighting fairer and more transparent. This prevents a disproportionately high weighting of companies with a large percentage of shares in block ownership. Moreover, in cases of cross shareholdings, it also prevents multiple counting of companies contained in one and the same index.
Block ownership (as opposed to free float) is considered to be shares held by a shareholder which, cumulatively, make up at least five percent of the registered share capital in one class of share. Also counted as shares held by a given shareholder are shares that are managed for the account of a third party or belong to a company that is controlled by the shareholder. Block ownership also includes all shares that are subject to a legal or contractual lock-up period of at least six months. Shares that are held by portfolio managers or investment companies are not counted as block ownership, regardless of how high the holdings are.
Deutsche Börse also pointed to the changes in the composition of its SDAX and NEMAX 50 indices as of June 24. As reported in Mai, for the first time the exchange has based its selection of the companies for these indices exclusively on the free float. To be newly included in the NEMAX 50 are Elmos Semiconductor, Technotrans and Mühlbauer Holding. These companies replace Broadvision, Pixelpark und Trintech Group in the index.
As previously announced, the number of companies in the SDAX will be limited to 50 as of June 24. A list of the SDAX companies can be accessed on the Internet.
