With the guidance and direction of FTSE Russell’s independent practitioner committees, FTSE Russell regularly consults the market on changes to the methodology of its indexes to ensure that the indexes continue to meet investors’ requirements and define and lead global standards in indexing. The proposals set out in the various consultation documents are included in order to gather valuable market feedback and may or may not result in changes to FTSE Russell methodologies.
FTSE Russell Consultation on Minimum Free Float
The ground rules for the FTSE Global Equity Index Series (GEIS) specify that only securities with free floats of greater than 5% are eligible for index inclusion (GEIS rule 6.2.A). The rule is intended to ensure that an index represents an investment portfolio that excludes inconsequential stakes in companies. It also helps to ensure that index constituents have adequate liquidity and the 5% threshold is consistent with squeeze-out levels in certain jurisdictions. However, the presence of the rule means that certain very large companies with free floats less than 5% are excluded from GEIS and GEIS is arguably less representative than it might be as a result.
In contrast, and in recognition of the existence of large companies with small floats in China, the FTSE China A Free indexes permit securities with free floats of 5% or below provided they have an investable market capitalisation that exceed ten times the China regional inclusion level (China A Free rule 6.3.2). This rule was adopted from the FTSE Global China A Inclusion Indexes.
Following feedback and enquiries from index users, FTSE Russell would like to invite comment on whether the current eligibility requirement for securities to have a free float of above 5% should be waived for very large constituents in the FTSE Global Equity Index Series. Note: the FTSE UK Index Series is maintained according to separate ground rules and is not affected by this consultation proposal.
The consultation will close on October 25, 2019.
The responses will be reviewed by the FTSE Russell Product Governance Board and an update on FTSE Russell’s proposed approach will be communicated by Thursday, 31 October 2019.
- FTSE Russell consultation on the index eligibility of J-REITs (June 2019)
Japanese Real Estate Investment Trusts (J-REITs) have been listed on the Tokyo Stock Exchange since September 2001. However, at the time of the consultation, they were considered ineligible for the FTSE Global Equity Index Series (GEIS). The purpose of this consultation was to invite index users and other stakeholders to provide feedback as to whether the J-REIT definition under Japanese law constitutes as grounds to continue their exclusion from the FTSE Global Equity Index Series.
- FTSE Russell consultation on sustainable investment products (May 2019)
FTSE Russell to consulted with market participants to understand how they use our sustainable investment products and how enhancements can be implemented to further support clients.
The feedback received from this consultation will assist FTSE Russell in making decisions related to the topics considered. We value your input and participation.
- FTSE EPRA Nareit - Consultation on clarification of EBITDA Calculation (February 2019)
FTSE Russell, the European Public Real Estate Association (EPRA) and the National Association of Real Estate Investment Trusts (Nareit) – proposed clarifications to the calculation of eligible EBITDA to Appendix 7 of the Ground Rules of the FTSE EPRA Nareit Global Real Estate Index Series. These clarifications reflect current operational practice and do not affect the composition of the indexes.
Note F – Where General and Administrative, Corporate, Overhead or other operating expenses are not clearly allocated to any of the reporting segments in the annual report, the model considers a proportionate allocation based on the revenue breakdown of the different operating segments.
Note G – Any share of Net Operating Income from property funds managed by the company is considered eligible income if appropriate disclosure is provided in terms of the nature of the fund, the percentage of company ownership in a fund, and adequate provision of a breakdown of operational income. Any profit/loss arising from property revaluations, fair value adjustments and management fees will be excluded.
- FTSE Fixed Income Country Classification Framework Market Consultation (August 2018)
A distinguishing feature of multi-currency fixed income benchmarks is their approach to local market inclusion. There are a number of dimensions across which global markets can be evaluated to establish how they are represented as peer groups in broad-based benchmarks. These can include market size, credit rating, asset-type, designation as an emerging or developed market, and degree of market accessibility.
Users of global fixed income benchmarks require a robust and transparent framework for evaluating such local market inclusion considerations that can be applied to both flagship and bespoke benchmark construction. To provide the necessary foundation and enhance our benchmarking approach, this consultation proposed a robust and transparent scoring system to assign a “Market Accessibility Level” for local government markets. Given the proposed annual nature of the review for Market Accessibility Levels, FTSE Russell also solicited user preferences for a continual versus annual application of the objective market size and credit rating criteria for local market inclusion in flagship indexes once the accessibility framework is formally adopted.
- FTSE Fixed Income Client Consultation - Securitized Products (May)
As part of FTSE Russell's commitment to ensuring that our benchmarks remain representative of the markets they are intended to track and continue to address the needs of index users, market participants were consulted on several topics related to the securitized products market. In particular, feedback was solicited relating to how our mortgage benchmarks reflect the evolution of the agency mortgage backed securities market and the Single Security Initiative.
- FTSE TMX Canada Client Consultation - Fixed Income Index Inclusion Criteria Minimum Issue Size Thresholds (February)
A bond's amount outstanding represents an observable and transparent proxy for liquidity, with larger bonds generally being more widely held than small issues. As such, the minimum amount outstanding is a key design element for fixed income indexes. To ensure that an index continues to capture issuance at a level commensurate with the critical mass of investment and issuance of a market, the amount outstanding thresholds for index consideration should be periodically reviewed.
Please use the following link to access a summary of the results from this consultation: Summary Consultation Results
- Consultation on the Treatment of Suspensions (January)
The presence of suspended constituents in an equity index can create tracking difficulties for investment firms managing passive funds and ETFs, particularly in the presence of significant cash flows. Accordingly, index providers will typically delete suspended constituents from their indexes after some specified time period. However, the timing of the deletion, and the price at which the deletion takes place, can cause problems in their own right. The difficulties are exacerbated if the investment manager is using swaps or other derivatives to obtain the requisite exposure. This consultation paper details FTSE Russell’s existing rule for the treatment of suspended companies and describes how the rule was formulated. It then provides a series of questions to establish whether further enhancements might be made.
- Consultation on FTSE GEIS and Russell RGI Index Alignment (August)
Over the last two years, FTSE Russell has been working to align the methodologies of the FTSE Global Equity Index Series (GEIS) and the Russell Global Indexes (RGI). FTSE Russell’s objective is to conclude this project by 30 June 2018. This consultation set out the path FTSE Russell envisages to bring the two global index series into alignment, and included consultation questions on the important outstanding convergence question of how the index series should be reconstituted and reviewed.
- Voting Rights Consultation (June)
The SNAP IPO was highly unusual in that there were no voting rights attached to the offered share class. The lack of voting rights raised governance concerns, particularly for pure passive managers who are forced buyers. In the light of these concerns, FTSE Russell announced that it would defer consideration of SNAP at the forthcoming Russell index reconstitution and FTSE index quarterly reviews pending a consultation with index users and other stakeholders with regard to the future inclusion of such securities.
- FTSE TMX Canada Market Consultation - Universe Bond Index treatment of NVCC debt issued prior to 1 July 2017 (June)
On 5 June 2017, FTSE Russell announced that newly issued non-viability contingent capital (NVCC) bonds will be eligible for the flagship FTSE TMX Canada Universe Bond Index, effective from 1 July 2017. This decision was made after careful consideration to ensure that the FTSE TMX Canada Universe Bond Index continues to accurately measure and represent the domestic Canadian investment grade fixed income market. While inclusion of these securities ensures that the Universe Bond Index continues to have appropriate representation of core Canadian banking debt going forward, there are additional considerations for handling the outstanding issuance, which require further review. We are therefore soliciting stakeholder feedback regarding index treatment of previously issued (settled prior to 1 July 2017) non-viability contingent capital (NVCC) bank debt in the Universe Index.
- FTSE Private Investor Index Series Methodology Consultation (March)
As part of our commitment to deliver the best possible solutions for our clients, we have reviewed the current methodologies of the FTSE WMA Private Investor Index Series (renamed FTSE Private Investor Index Series from 1 March 2017).
- FTSE Russell Nationality Assignment (January)
As part of the ongoing effort to align the methodologies of the FTSE and Russell indexes, this consultation set out a proposal for a unified nationality assignment rule that could be applied consistently across both FTSE and Russell global index series.
Rule Change Notification
- FTSE TMX Canada Client Consultation Index Evolution Pathway (January)
Consultation on an index evolution pathway for the FTSE TMX Canada Indexes that is designed to capture and track new and developing asset categories in Fixed Income.
- FTSE EPRA/NAREIT Global Real Estate Index Series Consultation (December)
To ensure that the FTSE EPRA/NAREIT Global Real Estate Index Series continues to capture the investable global real estate universe in a clear, comprehensive and transparent way, this consultation sought feedback on a number of proposed enhancements.
- FTSE Russell Client Consultation for Integrating Industry Classification Structures (December)
Consultation on a proposed unified classification structure for the Industry Classification Benchmark (ICB) and Russell Global Sectors (RGS).
- FTSE RAFI™ Index Series Methodology Enhancements (October)
Consultation on proposed methodology enhancement designed to simplify methodology and index construction, while streamlining the ongoing maintenance of the FTSE RAFI™ Index Series.
- FTSE Russell Consultation - Updating Shares Outstanding and Free Float (June)
As part of the ongoing effort to align the methodologies of the FTSE and Russell indexes, this consultation sought feedback on a proposed unified process for updating shares outstanding and free float.
Rule Change Notification
- Market Consultation on the Treatment of Suspended Constituents in the FTSE China A Index Series (October)
Market consultation on how extended suspensions should be treated in the FTSE China A Index Series.
Rule Change Notification
- FTSE Russell Client Consultation on Security Eligibility (October)
Market consultation on the eligibility of various security and company types.
- FTSE NAREIT US Real Estate Index Series (October)
Market consultation on proposed changes to the structure and definitions for the FTSE NAREIT US Real Estate Index Series.
- FTSE Global Equity Index Series User Consultation (June)
User consultation on a range of proposed enhancements including the use of depository receipts in preference to local shares, the treatment of stocks near foreign ownership limits, and fast entry requirements.
Rule Change Notification
Rule Change Notification
- FTSE UK Index Series User Consultation (June)
Market consultation on open offer implementation in the FTSE UK Index Series.
Rule Change Notification
- Country Classification (November)
Consultation on FTSE’s proposed approach to determining the eligibility of markets and the classification of countries.
- Nationality, Cross Holdings and Free Float in FTSE Indexes
Market consultation on nationality, cross holding and free float rules in FTSE Indexes.