FTSE Russell has published an overview of the provisional changes it expects to make to its FTSE UK Index Series rules following reforms to the UK listing regime by the Financial Conduct Authority ("FCA") later this year.
Whilst the FCA's wider reforms remain subject to ongoing consultation, FTSE Russell's overview provides market participants with important visibility on how it expects to adapt its FTSE UK Index Series ground rules and eligibility criteria.
Key updates
FTSE Russell's indicative summary and FAQs outlines the following key updates it currently expects to make, subject to any further developments in the FCA's proposals:
- all issuers on the new "Equity shares (commercial companies)" ("ESCC") and "Closed-ended investment fund" categories will become potentially eligible for inclusion in the FTSE UK Index Series (replacing the current requirement to be listed on the Premium segment);
- as issuers with a current Premium listing will be "mapped" to these eligible categories, the immediate impact to the composition of the FTSE UK Index Series is expected to be minimal on "day one".
- issuers listed on the "Equity shares (transition)" and "Equity shares (international commercial companies secondary listing)" categories (and, we presume, also "Equity shares (shell companies)") will not be eligible for the FTSE UK Index Series – consistent with the current position for Standard listed issuers;
- FTSE Russell does not intend to introduce any additional index inclusion requirements which would replicate specific current Premium listing requirements – instead it will only update the rules to reflect the changes to the UK listing categories;
- whilst FTSE Russell's overview does not address the point explicitly, the current expectation is that the existing dual free float requirements (10% for UK incorporated issuers and 25% for non-UK incorporated issuers) will be retained;
- following introduction of the new listing regime, issuers may decide to transfer to, or list on, the ESCC, resulting in them becoming potentially eligible for inclusion in the FTSE UK Index Series (at the following quarterly index review and subject to them satisfying all other inclusion criteria);
- ESCC, "Equity shares (transition)" and "Equity shares (international commercial companies secondary listing)" will be eligible for inclusion in the FTSE Global Equity Index Series (the "FTSE GEIS") and associated indices – meaning immediate impact to the composition of the FTSE GEIS on "day one" is expected to be minimal;
- the minimum voting requirement requiring greater than 5% of voting rights to be in public hands will be retained – where an issuer has shares with enhanced voting rights, the enhanced voting ratio will be used to determine if this test is satisfied;
- issuers listing on the ESCC will need to satisfy the 20-day trading requirement to be eligible for potential inclusion in the FTSE UK Index Series at the following review – for example, an issuer will need to trade unconditionally on the ESCC on or before 6 August 2024 to be eligible for potential inclusion at the September 2024 index review;
- there are no rules preventing an issuer with a secondary listing in London transferring to the ESCC and then being included in the FTSE UK Index Series, subject to the issuer satisfying all other inclusion criteria (including a UK nationality assignment); and
- the above changes are provisional and remain subject to change by FTSE Russell, depending on any further developments or changes to the final UK listing rules announced by the FCA.
Next steps
Once the FCA's wider reforms to the UK listing regime have been finally confirmed and announced (currently expected to take effect early in the second half of 2024), FTSE Russell intends to publish its final updated ground rules shortly thereafter. FTSE Russell will provide further updates in due course.
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