Bloomberg News

FTSE Boosts Free-Float Requirement for U.K. Index Listings

December 14, 2011

(Updates with ENRC comment in final paragraph.)

Dec. 14 (Bloomberg) -- FTSE International Ltd. boosted the minimum free float required for companies seeking inclusion in its benchmark U.K. equity gauges to 25 percent after a consultation with investors and traders.

The necessary free float, or amount of stock available for investors to buy and sell in the market, for U.K.-incorporated companies will rise from 15 percent, London-based FTSE said in a statement today. The increase, which will take effect on Jan. 1, came after 83 percent of respondents in a consultation wanted the change, the index provider said.

“It should be good news for the market both in terms of transparency and corporate governance,” said Richard Hunter, the London-based head of equities at Hargreaves Lansdown Plc, “It is a reaction to concerns expressed by market participants that such tightly held shares are over-reliant on existing owners and it has also enabled a number of resource companies to fast track their inclusion into the FTSE 100.”

Earlier this week, London Stock Exchange Group Plc agreed to buy the 50 percent of FTSE International that it doesn’t already own from Pearson Plc for 450 million pounds ($702 million). The acquisition of FTSE International, which publishes the U.K.’s benchmark FTSE 100 Index and more than 200,000 other gauges, is expected to be completed in the first quarter of 2012.

Overseas Businesses

The free-float change will only apply to U.K.-incorporated companies. Overseas businesses must already have a minimum free float of 50 percent to enter one of FTSE’s gauges.

“The responses represent the views of a balanced cross- section of the market, including asset owners and their consultants, investment managers, investment banks, trading venues, and trade bodies or associations,” FTSE said in the statement. “The consultation showed a clear preference from respondents.”

Companies already included in FTSE indexes that don’t currently meet the 25 percent threshold will be given two years to increase their free float, FTSE said today. Such firms include Eurasian Natural Resources Corp., Essar Energy Ltd., Evraz Plc, Ferrexpo Plc and Fresnillo Plc, according to the index producer.

“ENRC is fully committed to retaining its listing on the FTSE and will take appropriate steps to comply with the updated ground rules over the next 24 months,” Andrew Benbow, an external spokesman for the Kazakh metals producer, wrote in e- mailed comments.

--With assistance from Firat Kayakiran in London. Editor: Andrew Rummer

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net; Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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