NEW YORK, Jan. 21, 2015 /PRNewswire/ -- S&P Dow Jones
Indices today announces changes to the S&P U.S. Indices
methodology after reviewing feedback received from its recent
client consultation:
Multiple Share Class Treatment: Effective with the
September 2015 rebalance, S&P Dow
Jones Indices will include all publicly listed multiple share class
lines separately in its float market cap (FMC) weighted indices
subject to liquidity and float criteria currently in place for each
index. Index membership eligibility for a company with
multiple share class lines will continue to be based on the total
market capitalization of the company. The decision to include each
publicly listed line will be evaluated line by line; the weight of
each line will only reflect its own float, not the combined float
of all company lines. There will no longer be consolidated lines in
S&P U.S. FMC indices. It is possible that one listed share
class line may be included in an index while a second listed share
class line of the same company is excluded. Unlisted share class
lines will not be combined with any other listed share class lines,
but these unlisted share class lines will be included in the
company total market capitalization.
For S&P 1500 constituents, listed share class lines not
currently in the index would need to pass current liquidity and
float criteria, but not market capitalization criteria (which is
only considered at the company level). Once a listed share class
line is added to an index, it will be retained in the index even
though it may appear to violate certain addition criteria. Listed
share class line deletions will be at the discretion of the
governing Index committee. Alternatively weighted indices that
follow the composition of an S&P Dow Jones FMC index will
continue to utilize the same composition as the parent index.
Below is a summary of the anticipated index changes on the major
US headline indices resulting from this methodology change. Please
note that final index changes effective with the September
rebalance will be officially communicated through the standard
channels at a later date.
S&P 500
There are currently 13 companies with two or more publicly
listed share class lines in the S&P 500. Two of these
companies, Discovery Communications Inc. (NYSE: DISCA/DISCK) and
Google Inc. (NASD:GOOG/ GOOGL) are already represented by two share
class lines each in the index.
Under the new methodology, it is anticipated that current
S&P 500 index constituents Comcast Corp. (NASD:CMCSA/CMCSK),
Twenty-First Century Fox Inc. (NASD:FOXA/FOX) and News Corp.
(NASD:NWSA/NWS) will have an additional share class line added to
the S&P 500. The current weight of these companies in the
S&P 500 will be distributed between the two lines representing
the company in the index. The second share class lines of these
companies all meet current liquidity and float criteria for the
index. Market capitalization is measured at the company level
only.
Under current methodology, there are 500 companies and 502
trading lines in the index. Effective with the methodology change,
it is anticipated there will be 500 companies and 505 trading lines
in the index.
Due to turnover and liquidity concerns, S&P 500 constituent
Berkshire Hathaway Inc. (NYSE:BRK.B) will be an exception to
this rule. S&P Dow Jones Indices will continue to consolidate
the share count for this company under the B share class line.
S&P MidCap 400
There are currently eight companies with two or more publicly
listed share class lines in the S&P MidCap 400. It is
anticipated that no additional share class lines will meet the
necessary liquidity and float thresholds for index inclusion.
S&P SmallCap 600
There are currently eight companies with two or more publicly
listed share class lines in the S&P SmallCap 600. It is
anticipated that S&P SmallCap 600 index constituent Central Pet
& Garden Inc. (NASD:CENTA/CENT) will have an additional listed
share class line added to the S&P SmallCap 600. This second
listed line meets current liquidity and float criteria for the
index. Market capitalization is measured at the company level
only.
For the above indices, it is possible that certain multiple
share class companies will see a weight decrease in the indices
reflecting the lower market cap impact of only including the share
count from a single listed share class line rather than the current
consolidated share count. Turnover for this change across indices
is expected to be minimal as most currently consolidated lines
already reflect float shares.
For weekly share reviews, 5% share changes will be based on each
multiple share class line rather than total company shares.
Public Secondary Offerings: Effective immediately,
new language will be added to the US Indices methodology to clarify
the criteria for recognizing next day secondary offerings in the
S&P 1500. The new language will state that "public secondaries
eligible for next day share implementation must be underwritten,
must have a publicly available prospectus or prospectus summary
filed with the SEC, and must include a public confirmation that the
offering has been completed. Block trades and spot secondaries are
not eligible for next day implementation."
Securities Eligible for inclusion in U.S. Indices:
Feedback from the client consultation favored no change in eligible
securities. Therefore, Limited Partnerships (LP's), Limited
Liability Corporations (LLCs) Master Limited Partnerships (MLPs)
and other types of securities will not be considered for inclusion
in headline indices at this time.
A summary of the methodology changes can be found in the
following table:
Change
|
Current
Methodology
|
New
Methodology
|
Multiple Share Class
Lines: S&P Dow Jones Indices is allowing certain listed
multiple share class lines to be included separately in its
indices. There will no longer be consolidated lines in S&P U.S.
FMC indices. Change to be effective with the September 2015
rebalance.
|
Companies that have
more than one class of common stock outstanding are represented
only once in an index. The stock price is based on one class, and
the share count is based on the total shares outstanding of all
classes.
|
There will no longer be
consolidated lines in the index. All multiple share class companies
that have listed share class lines will be adjusted for shares and
float such that each share class line will only represent that
line's shares and float. All multiple share class companies that
have an unlisted class line will also be adjusted.
|
Secondary
Offerings: Clarifying the
criteria for recognizing next day secondary offerings in the
S&P 1500. Change to be effective immediately.
|
Changes in a company's
total shares outstanding of 5% or more due to public offerings… are
made as soon as reasonably possible.
|
Public secondary
offerings eligible for next day share implementation must be
underwritten, must have a publicly available prospectus or
prospectus summary filed with the SEC, and must include a public
confirmation that the offering has been completed. Block trades and
spot secondaries are not eligible for next day
implementation.
|
The S&P U.S. Indices methodology document will be updated on
www.spindices.com to reflect these changes on or about their
effective date.
About S&P Dow Jones Indices
S&P Dow Jones Indices LLC, a part of McGraw Hill Financial,
is the world's largest, global resource for index-based concepts,
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as the S&P 500® and the Dow Jones Industrial Average®, S&P
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www.spdji.com.
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SOURCE S&P Dow Jones Indices