Skip to main content

You are here

Blog Listing Page

Russell indexes reconstitution delivers yet again

Russell indexes reconstitution delivers yet again

By: Ron Bundy, North America Benchmarks CEO

While the US Postal Service does not have an official creed, the phrase most often associated with this venerable institution is an inscription on the historic James A. Farley Post Office Building in New York City:

Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.

The message is clear – no matter what challenges arise, you can count on the Postal Service to make sure the mail arrives on time like clockwork.

While our FTSE Russell team may be rebalancing indexes that are used to benchmark approximately $6 trillion in investor assets on a single US trading day, I’m proud that our team “delivered the mail” again this year, despite the unexpected result of the UK referendum  to leave the European Union being announced on the same day as the reconstitution.

As I woke up on the last day of the annual Russell US Indexes reconstitution, or “Russell shuffle” as some market reporters like to describe it, and saw major networks and financial websites using phrases like “plunge,” “sell-off” and “meltdown” to describe the global equity market reaction to overnight news on the results of the UK’s EU Referendum, I was confident, but understood that it would be a test for our recon process.

Our clients were concerned about how the unexpected news and global equity market volatility might impact the market’s ability to realign more than $6 trillion in investor assets benchmarked to and $800 billion in assets passively tracking the Russell US indexes. Indeed, we received a number of questions from reporters and clients that morning about whether our reconstitution would conclude on Friday as scheduled or we would have to delay or postpone it.

We spent the day reassuring clients and investors that our Russell US indexes reconstitution is a well-built, time tested and transparent process. From the announcement of our annual reconstitution schedule in March, to our initial posting of expected adds and deletes to the Russell US indexes in mid-June, to the final day of reconstitution on the last Friday in June, the focus is on transparency and information for our clients.

And, of course, our US equity exchange partners, primarily the New York Stock Exchange and the Nasdaq, play a very important role. We manage the Russell US indexes, but not the assets that track them. These are held by various investors and purchased and sold on the US exchanges. In fact, as we rang the closing bell at the Nasdaq on Friday, our Nasdaq partners informed us that 933 million reconstitution-related transactions encompassing $20.6 billion in assets were executed across 2,464 Nasdaq-listed stocks in 0.8 seconds as part of the annual Nasdaq Russell reconstitution “closing cross.” And Nasdaq is just one of many US equity exchanges on which reconstitution-related trades took place on Friday.

As I rang the bell at Nasdaq’s “MarketSite” facility in the heart of New York’s Times Square to officially close a volatile Friday for the US markets, I couldn’t help but think that like the Postal Service we had reliably completed our rounds again, honoring the time tested process of Russell US indexes reconstitution in the midst of a historic day for the global equity markets.

Source: Nasdaq


© 2016 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together, “FTSE TMX”) and (4) MTSNext Limited (“MTSNext”). All rights reserved.

FTSE Russell® is a trading name of FTSE, Russell, FTSE TMX and MTS Next Limited. “FTSE®”, “Russell®”, “FTSE Russell®” “MTS®”, “FTSE TMX®”, “FTSE4Good®” and “ICB®” and all other trademarks and service marks used herein (whether registered or unregistered) are trade marks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, or FTSE TMX.

All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained herein.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Russell indexes or the fitness or suitability of the indexes for any particular purpose to which they  might be put.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this communication  should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group index data and the use of their data to create financial products require a license from FTSE, Russell, FTSE TMX, MTSNext and/or their respective licensors.

Blog Listing Page