The decision has been made to ensure the following market issues are adequately addressed:
- Liquidity - Under the current proposal, a number of companies have been identified with the requisite free float allocation but with low investibility due to infrequent trading. This is mainly due to major strategic stakeholdings. As a consequence, we will be reviewing the parameters for our liquidity criteria further.
- Reviewing free float adjustment - Adjustments may be required to create flexibility for certain companies which have sufficient liquidity, but who don't quite reach the proposed $1 billion free float.
The NZSE also recognizes the disruption that might be created for brokers and major institutions at the end of the quarter, when the rebalancing of portfolios may be required, if the new indices are introduced as proposed on 31 December 2002. This is particularly true given it is the end of the December quarter, which is dominated by the holiday season.
"It's important for us to balance the needs of all our stakeholders and this involves full assessment of each group's concerns," says Geoff Brown, NZSE Market & Relationships Manager. "We will be reviewing the large amount of feedback received to ensure we've captured all views and will announce the new composition and rules early in the New Year."
The final NZSE Indices' composition and operating procedures will be announced in mid-January. It is currently the NZSE's intention to adopt the recalculation policy from February 2003.
