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FTSE Group (“FTSE”), the award winning global index provider, today announces that it is undertaking a market consultation on the minimum free float requirements for UK incorporated companies in the FTSE UK Index Series.
As part of the ongoing process to refine the Ground Rules of FTSE indices and achieve the highest possible standards in index design, FTSE regularly consults the market on changes to the rules to ensure that the indices continue to meet investors’ requirements. In July of this year, FTSE consulted the market on a number of topics relevant to the construction of the FTSE UK Index Series and the FTSE Global Equity Index Series.
The market consultation on the eligibility requirements for UK incorporated companies in the FTSE UK Index Series (which includes the FTSE 100 and FTSE All-Share Index), will invite market participants from all sections of the investment community to submit their views on the minimum free float requirement for index inclusion.
The current ground rules for both the FTSE UK Index Series and the FTSE Global Equity Index Series stipulate a minimum free float of 15% for a company to be eligible for inclusion in either index series (there is an exception for very large companies). However, in respect of the UK Index Series, FTSE has received a number of requests to raise the minimum free float requirement for a company to 25%; this float would be consistent with the minimum required by the UK Listing Authority for a company to obtain a premium listing.
FTSE will consult on this proposal, and also on whether exceptions should be granted in those circumstances where the FSA has itself granted an exception for a premium listing. The proposed minimum free float of 25% would apply only to UK incorporated companies. Companies incorporated outside of the UK are already subject to a higher free float threshold of 50%. If the consultation leads to a change in the rules, any FTSE All-Share stocks with less than 25% free float will be grandfathered to allow them time to increase their free float.
The results of the market consultation and any proposed changes to the UK Index Series Ground Rules will be presented to the FTSE Policy Group in December 2011. The FTSE Policy Group’s decision on whether to ratify any proposed changes to the Ground Rules will be final.
To view and participate in the consultation, please visit www.ftse.com/2011Consultation
