Further to the FTSE notice released on 22 June 2012 in relation to the adoption of actual free float (rounded up to the next 1%) in the FTSE SET Index Series effective from March 2013, FTSE confirms that in order to provide clarity on the management of float changes in the interim period, that float changes up to 31st December 2012 will normally be made in accordance with the current banding methodology.
Between the publication of final confirmed actual free float numbers on 31 December 2012 and their application in March 2013, float changes will normally only be made to reflect a corporate event where the new band complements the actual float (i.e. the banding will not require a reverse transaction in March 2013 - see the examples below).
However, in exceptional cases (e.g. following a complex corporate event), at anytime between now and March 2013, FTSE may use its discretion in determining a free float change in order to avoid unnecessary turnover. In all cases FTSE will issue an advance notice to confirm when a banded float change will or will not be applied.
For illustration purposes (between 31 December 2012 and application in March 2013):
a) If a stock is currently banded at 50% and following a corporate event its actual float moves to 58%, the existing methodology would determine the new band to be 75%. However FTSE would retain the band at 50% in order to avoid unnecessary turnover.
b) If a stock is currently banded at 50% and following a corporate event its actual float moves to 78%, the existing methodology would determine the new band to be 100%. In this case FTSE would implement a banding change to 75% as the change would not subsequently need to be reversed.
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