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NASDAQ OMX Nordic, part of the NASDAQ OMX Group (NASDAQ:NDAQ) reports that it will make the following amendments to its market capitalization (market cap) classification standards.
- Effective July 2009, the annual review (based on average market cap in May 2009) will consider the total number of shares in the calculation of market cap, instead of only including shares listed on a regulated market. Effective January 2010, each segment (small-, mid- and large cap) will be reviewed annually (based on average market cap in November) instead of bi-annually.
- Effective July 2009, companies with a market cap value of more than 50 percent of the minimum or maximum threshold of each segment will be transferred into the new segment with immediate effect. Companies with a market cap value of less than 50 percent of the minimum or maximum segment threshold, will have a transitional period until the next review (or at least 12 months), and thus be subject to one more review before transferring into the new segment.
“Following the decision to cancel the amendments in January due to extreme market conditions, we took the opportunity to review the market cap classification standards to try to find a more sustainable model,” said Hans-Ole Jochumsen, President NASDAQ OMX Nordic said. “We have listened carefully to our customers to ensure that the amendments we are implementing match their needs as well as the needs of investors.”
Jenny Rosberg, Deputy President NASDAQ OMX Nordic said: “Through these amendments we keep our current market cap classification structure in line with international standards, while adopting a model that is built to withstand strong market fluctuations and thus support financial stability for our listed companies.”
The decision to carry out the above mentioned amendments is made in accordance with NASDAQ OMX Nordic's segmentation classification practices.
About the market cap segments
Companies belong to a market cap segment (small-, mid- and large cap) based on its average market value during the given review month. Companies with a market value exceeding EUR 1 billion are in the group of “Large Cap”, while companies with a market value smaller than EUR 150 million belong to “Small Cap”. Companies with a market value between EUR 150 billion and EUR 1 billion belong to the “Mid Cap” segment.
SUMMARY OF MARKET CAP CLASSIFICATION AMENDMENTS
Calculate total number of shares
Today NASDAQ OMX Nordic markets only include the number of shares that are listed on a regulated market. According to the classification amendments the total number of shares, i.e. both listed and non-listed shares, of a company will be considered in the calculation of market cap. This amendment is effective July 2009 (based on average market cap in May 2009).
Annual review of segments
Today the NASDAQ OMX market cap segments (small-, mid- and large cap) are updated bi-annually in July and January (based on average market cap in May and November respectively). From January 2010 each segment will be reviewed annually instead of bi-annually. Annual revision will be based on average market cap value in November each year and take effect January 1st the following year.
12 month transitional period
Companies with a market cap value of more than 50 percent of the minimum or maximum threshold of each segment will be transferred into the new segment with immediate effect. Companies with a market cap value of less than 50 percent of the minimum or maximum threshold of each segment will have a transitional period until the next review (or at least 12 months), and thus be subject to one more review before transferring into the new segment.
Hence, based on the EUR 1 billion Large-cap and EUR 150 million Mid-cap thresholds, a Large-cap a company whose market cap value has not fallen below EUR 500 million, and a Mid-cap company whose market cap value has not fallen below EUR 75 million, will be subject to a second review before moving down to the new segment.
Similarly, a Mid-cap company whose market cap value has not exceeded EUR 1.5 billion and a Small-cap company whose market cap value has not exceeded EUR 225 million, will be subject to a second review before moving up to the new segment.
