“While the top three banks in the BKX accounted for about 33% of the index at inception in 1992, they have now increased to over 50% due to consolidation in the financial services sector,” said Thomas Michaud, KBW Vice Chairman and Chief Operating Officer. “With the change in index calculation the weighting will again return to approximately 30%.”
The BKX is comprised of 24 national money center and leading regional banks and is widely used on Wall Street to gauge the state of the banking industry. Options on the BKX trade exclusively at the Philadelphia Stock Exchange and are used by traders and institutional money managers to anticipate and respond to fundamental shifts in the banking sector. To assure that the composition is highly representative of the banking industry, Keefe, Bruyette & Woods evaluates the index at least annually. In that regard, KBW also announced that North Fork Bancorporation (NFB) will be added to the BKX on October 20, 2004, replacing SouthTrust Corporation (SOTR), which is expected to shortly close its recently announced merger with Wachovia Corporation (WB).
The KBW Insurance Index (KIX), which was previously price-weighted, will also be recalculated to a modified market-cap weighting in order to insure consistency with the rest of the KBW family of indices.
KIX is composed of 24 leading insurance companies active in the U.S. markets. KIX is designed to effectively represent the price performance of the broad and diverse U.S. insurance industry. This representation is achieved through the inclusion of major companies in the industry. In fact, KIX components account for approximately three-quarters of the market capitalization of the entire U.S. public insurance company universe. In addition, KIX components were selected to provide appropriate representation of the industry’s diverse sub-sectors including personal and commercial lines property/casualty insurance, life insurance, reinsurance, insurance brokerage, and financial guarantee.
“The BKX ranks as the 11th most actively traded Index option in the U.S. year to date and has been one of the top 5 options listed on the PHLX by open interest,” noted Dan Carrigan, Vice President of New Product Development at the Philadelphia Stock Exchange. “The KIX has also continued to see its open interest increase and has quickly become one of the top 10 options on the PHLX by that measure.”
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About Keefe, Bruyette and Woods
Keefe, Bruyette, & Woods, Inc (KBW) is an institutionally oriented securities broker/dealer and full service investment bank that specializes in the financial services sector. Founded in 1962 and 100% employee-owned, the firm has long been recognized as a banking industry authority and, in recent years, has expanded its focus to include insurance companies, broker/dealers, mortgage banks, asset management companies, and specialty finance firms. For more information, please visit www.kbw.com.
The Philadelphia Stock Exchange (PHLX) was founded in 1790. The PHLX trades more than 2,200 stocks, 1,016 listed equity options, 12 sectors index options and currency pairs. For more information about the PHLX and its products, visit www.phlx.com.
