<b>The rules pertaining to Investable weight factor.</b> -- ERG trade data forum

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Date Posted: 03:42:03 02/18/03 Tue
Author: No name
Subject:

The rules pertaining to Investable weight factor.

Superdog7 (ID#: 418620) INGInvestable weight factor March 15--to March22 8/10/02 8:16:54 PM 5602712
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http://www.spglobal.com/floatproposalasx.pdf
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What is Free Float? How is it Determined? Free float can be defined as the percentage of each company�s shares that is freely available for trade. It may also be described as the contestable shares in the marketplace for each company. By weighting stocks according to free float, indices more accurately reflect the effective trading opportunities for institutional investors. This improves the investability of an index.Indices worldwide are progressively moving towards a free float methodology because of increased demands for investability and transparency.
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A fully free floated company will have an IWF = 100%. Where necessary, Standard & Poor�s will adjust the IWF downward to exclude the following holdings that are greater than 5%:
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Government and government agencies.
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Controlling and strategic shareholders/partners.
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Any other entities or individuals which hold more than 5%; excluding insurance companies,securities companies, securities and finance companies, as well as investment funds (e.g.mutual funds, and pension funds, except when such holding is deemed to be strategic).
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Other restricted portions, such as treasury stocks or strategic holdings.
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Of particular note:
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Institutional investor holdings for the purposes of an investment portfolio are not excluded, if deemed to be a non-strategic holding
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Foreign investment restrictions will not be excluded from the S&P/ASX indices, as the
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purpose is to reflect those shareholdings available to local institutions. FIRB restrictions
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generally do not apply to overseas investors if the holding is within an investment portfolio.
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This means an overseas investor will not have difficulty attaining index weight, even if
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foreign restrictions are not excluded.
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IWF�s are calculated to the nearest percentage, and adjusted annually unless in the event of a significant shift in free float (greater than 5%).
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Detailed below is an example of an IWF calculation. All holdings greater than 5% are reviewed.
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Company Alpha Top Shareholders:
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Shareholder % Holding Include/Exclude
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Company Beta 32% EXCLUDE
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Mr Gamma (CEO) 12% EXCLUDE
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Delta Nominees 8% INCLUDE
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Theta Investments 7% INCLUDE
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IWF: 100 � (32 + 12) = 56%
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