Key among the changes announced is a set of new criteria for inclusion and maintenance of public companies in the index. There will no longer be a requirement for the index to have exactly 300 constituents. Company size and liquidity will be the chief attributes determining index membership.
"The entire Canadian investment community has been very supportive of our efforts to bring Canada a better benchmark index," said Richard Nesbitt, President TSE CDNX Market Services Inc. " As the leader in this field, the changes Standard & Poor's is making will further elevate Canadian companies as investment opportunities for Canadian and international investors."
Glenn Doody, Director of Canadian Index Services for Standard & Poor's, said, "The changes will address two main functions of a good benchmark - it must be investable and it must be representative of a fund manager's portfolio. Given that many fund managers limit their investments to companies in the top two-thirds of the index, these changes ensure that the index will serve Canadian investors well, " he added.
Under the new rules the number of stocks making up the index will vary over time. All stocks that qualify for inclusion during quarterly reviews will be automatically included in the index. There will be two basic standards by which companies will be evaluated - size and liquidity. Size measurements will be based on minimum price and market capitalization. Liquidity measurements will be based on trading activity on the Toronto Stock Exchange. For more information, please visit our websites at www.spglobal.com or www.tse.com.
In addition, Standard & Poor's said that the Global Industry Classification Standard - GICS - will be incorporated in the revised index. The current TSE 300 Composite Index uses an older classification system that divides stocks into 14 groups and is unique to the Canadian marketplace. GICS - developed by Standard & Poor's and Morgan Stanley Capital International (MSCI) - was created in response to the global financial community's need for a single and consistent set of industry definitions. GICS has rapidly gained acceptance worldwide and its use in the S&P/TSE Composite will allow investors to compare accurately the performance of Canadian indices with those around the world. The new GICS-based Indices will be introduced starting on March 22, 2002.
Index Products and Standard & Poor's
The S&P 500 Index is widely regarded as the standard for measuring large-cap U.S. stock market performance. Its Canadian counterpart, the S&P/TSE 60 Index, consists of the actively traded, liquid shares of 60 large-cap companies representing all 10 economic sectors within the S&P/MSCI Global Industry Classification Standard (GICS). Constituent companies are chosen from a universe of publicly traded Canadian companies, covering approximately 70% of the free float-adjusted market capitalization of the broader Canadian market. It also represents the Canadian portion of the S&P Global 1200, which is made up of six regional indices, including the S&P 500 in the United States and the S&P Europe 350. S&P indices have traded products on four continents.
Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Standard & Poor's, a division of The McGraw-Hill Companies (MHP: NYSE), is a leading global provider of financial information and investment analysis. Included among its product lines are corporate financial information, corporate valuations and value analysis, analytical services, and credit ratings on more than 220,000 securities and funds worldwide. With more than 5,000 employees located in 18 countries, Standard & Poor's is an integral part of the world's financial architecture. Additional information is available at www.standardandpoors.com
The Toronto Stock Exchange Inc.
The TSE group of companies includes The Toronto Stock Exchange Inc., Canadian Venture Exchange Inc., and TSE CDNX Markets Inc., which collectively manage all aspects of Canada's senior and junior capital markets. The TSE is headquartered in Toronto and maintains offices in Montreal, Winnipeg, Calgary and Vancouver.
