The current method of selection to the ICEX-15 index has given good results. Modifications which took effect in March 2004 increased emphasis on liquidity and required ICEX-15 companies to publish their news announcements in English. Despite the success of these changes, the decrease in the number of ICEX-listed companies in the past few years has reduced the effect of liquidity on the selection. ICEX has therefore been reviewing its method of selecting companies for the ICEX-15 index, and the outcome is the accompanying proposal for a new method. The proposal is also available on the ICEX website (www.icex.is) under Quotes and Markets / Share Indices / About Indices. Its aim is first and foremost to increase emphasis on liquidity once more. The proposal is also aimed at preventing the reduction in the number of listed companies from reducing competition for places in the index. To this end ICEX proposes to:
- award turnover points to only the 12 most-traded companies each day (instead of the current 15), and
- limit the selection to the 15 companies receiving the highest number of turnover points (instead of the current 20).
Although increased emphasis is given to liquidity, market cap continues to be a significant factor in selection to the index, since a company which is among the 15 awarded the highest number of turnover points will only be included in the index if it is among the 18 largest in terms of free-float adjusted market cap. This will be increased from 18 to 20 if the number of Main List companies reaches 25 or more (excluding those companies who fail to fulfil listing requirements or are the object of takeover bids). The companies must also satisfy the same spread requirements as are currently applied. There will be no more "relaxing" of requirements to obtain 15 companies for the index. Nonetheless, a minimum of 12 companies is to be included, even in the unlikely situation that fewer than 12 companies fulfil all the above requirements (turnover points, market cap, spread). The idea of setting a minimum is to ensure a certain breadth and to open up the possibility of including liquid companies in the index even if they are not very large.
Comments and entry into force
Interested parties are invited to send their comments on the new selection method proposed by ICEX. The deadline for submitting comments is 16 June 2006. They should be sent by e-mail to floor@icex.is. A final decision on the method will be announced in the ICEX News System by the end of June. The new method would be applied for the first time in the selection to the index made in December of this year. For further information please contact Birna Margret Olgeirsdottir (birna@icex.is tel. +354 525 2852), Hermann Thrainsson (hermann@icex.is tel. +354 525 2854) or Magnus Hardarson (magnus@icex.is tel. +354 525 2853).
