1. Euronext Paris indices
1-1 New midcap indices
A first step will come on 3 January 2005 with the launch of three new indices for medium-size stocks. These are the CAC Mid100, the CAC Small90 and the CAC Mid&Small190, the last being a combination of the first two.
As with other indices managed by Euronext, component stocks will be selected on the basis of both liquidity and capitalization criteria.
The CAC Mid100 will thus be made up of the 100 stocks with the largest market capitalizations after the 60 largest, subject to the condition that annual velocity ratio (i.e., the annual volume of trading in the stock as a percentage of total number of shares) exceeds 5%. The index will be calculated every 30 seconds throughout trading. The same methodology will apply to the CAC Small90, made up of the 90 stocks ranking immediately after the components of the CAC Mid100 by capitalization. The CAC Small90 will be calculated twice a day, at the opening and close of trading.
As an indication, it may be noted that at 30 September 2004 capitalization of stocks in the CAC Mid100 ranged from €250 million to €4 billion, and that of stocks in the CAC Small90 from €70 million to €250 million.
The new indices have been set up in response to the needs expressed by investor and asset management professionals specializing in this type of company.
Alain Leclair, President of AGF (Association de la Gestion Financière), the French asset management association, notes: “We are particularly pleased that these reforms have been developed and set in motion in close cooperation with all the parties concerned, in particular asset managers. That applies not only to the new midcap indices but also to the other changes to the market.”
1-2 Other new indices
Also on 3 January 2005, Euronext will be launching two indices for larger stocks, with selection based on liquidity and free float capitalization. These are the CAC Next20, made up of the 20 largest stocks following CAC 40 components, and the CAC IT20, a technology-sector index. The 20 stocks making up the latter will represent areas of business that include software and IT services, makers of equipment for IT, telecoms, media and photography, and manufacturers of electric and electronic equipment. Both of these indices will be calculated every 30 seconds throughout the trading day. Finally, an CAC AllShares index, representing all the stocks listed with Euronext Paris for which annual velocity ratio exceeds 5%, will be launched on 1 July 2005. It will count about 500 components.
1-3 A homogeneous set of indices
The Euronext range of indices will thus comprise the CAC 40, the CAC Next20, the CAC Mid100, the CAC Small90, the CAC Mid&Small190, the CAC IT20, the CAC AllShares index, the SBF 120 and the SBF 250. Dovetailing one into the other, they make up a homogenous set in terms of:
- methodology, with selection based on capitalization, liquidity and free-float
- review by the Expert Commission, Indices Committee. Reviews are quarterly for CAC 40 and CAC Next20 and annual for all others. Additional reviews are conducted where corporate actions make this appropriate.
Second Marché, Nouveau Marché, MidCac and ITCAC 50 indices will be maintained until at least the end of June 2005.
2. Creation of a single regulated market
2-1 Operational switch to the single regulated market
Considering the complexity of related IT processing, stocks listed on the Euronext Paris Premier, Second and Nouveau Marchés will be switched to the single regulated market, Eurolist by Euronext, in two stages. Shares and bonds will be transferred on the evening of 18 February 2005, and other products such as ETFs and warrants will be transferred on the evening of 25 February 2005.
As already announced, the companies listed on the single market will be classified in alphabetical order. A capitalization indicator will be attached to each, distinguishing between small caps with market capitalization under €150 million, mid-caps with capitalization between €150 million and €1 billion, and large stocks with capitalization over €1 billion.
2-2 A single set of regulations
The same regulations, established in accordance with EU Directives, will apply to all companies listed on the single regulated market.
Companies applying for listing must present audited financial statements covering three years and make a sufficient quantity of shares available to the public. As stipulated in EU regulations, the number of shares made available is considered adequate when free float represents 25% or more of equity or if it is sufficiently high to ensure orderly market operation.
3. Other reforms
3-1 Special status for midcap experts
The status of midcap expert will become effective in January 2005 on Euronext Paris. The list of intermediaries having opted for this status will be published by the end of the year.
To obtain midcap expert status, intermediaries must undertake to provide promotional support and regular financial analysis for 60 medium-size stocks, including 20 with capitalizations under €150 million and ten that are the object of fewer than 2,500 trades a year.
3-2 Reforms on other Euronext markets
The reforms now under way for the Paris market will be extended to Amsterdam, Brussels and Lisbon in the first half of 2005, the aims again being to unify markets and promote medium-size stocks. The framework adopted for Paris is now being adapted to the other centres.
3-3 Alternext
The launch of Alternext, intended to offer companies seeking to raise capital in the euro zone simplified market access provided they give adequate undertakings of financial transparency, will get under way in the first half of 2005. The appropriate admission requirements, market model and regulatory framework are now under consideration. Details will be made available when decisions have been reached on these points.
Click here for details of the structure of Euronext Paris indices.
