How was the FTSE UK Index Series eligibility criteria impacted by the introduction of a single segment for Equity Shares (Commercial Companies), which has replaced the legacy Standard and Premium segments?

September 17, 2024 03:21 AM AEST | By Team Kalkine Media

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How was the FTSE UK Index Series eligibility criteria impacted by the introduction of a single segment for Equity Shares (Commercial Companies), which has replaced the legacy Standard and Premium segments? — Image source: shutterstock

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The London Stock Exchange (LSE) has long been a central hub for securities trading, with various segments and categories providing investors with a range of options. Historically, the inclusion of securities in the FTSE UK Index Series was restricted to those trading on the Premium segment of the Main Market. This Premium segment was known for its stringent requirements and high standards, ensuring that only companies meeting these rigorous criteria could qualify for inclusion in the prestigious FTSE UK Index Series.

This approach meant that securities from the Premium segment, such as those from well-established companies like AstraZeneca (AZN), HSBC Holdings plc (HSBA), and BP plc (BP), were prominently featured in the FTSE UK Index Series. The Premium segment’s exclusivity underscored the index's role in reflecting the performance of top-tier, high-quality firms listed on the LSE.

However, the landscape of securities trading underwent a significant transformation with the introduction of a new listing regime. This reform expanded the criteria for eligibility, moving beyond the Premium segment to encompass additional categories. Under the revised regime, securities trading in the Equity Shares (Commercial Companies) category and the Closed Ended Investment Funds category now have the potential to be included in the FTSE UK Index Series.

The Equity Shares (Commercial Companies) category includes companies like Unilever plc (ULVR) and GlaxoSmithKline plc (GSK), which were previously limited to other segments of the LSE but are now eligible for inclusion in the FTSE UK Index Series. Similarly, the Closed Ended Investment Funds category, which features funds such as the Scottish Mortgage Investment Trust plc (SMT) and the Edinburgh Investment Trust plc (EDIN), now also meets the criteria for potential inclusion.

This change marks a notable shift in how the FTSE UK Index Series represents the UK market. By broadening the scope of eligible securities, the new regime aims to reflect a more comprehensive and diverse range of investments, capturing a wider spectrum of market activity and performance. The inclusion of a broader array of securities not only provides a more inclusive representation of the UK market but also enhances the index’s ability to reflect the evolving landscape of investments.

The updated criteria allow for greater flexibility and inclusivity, accommodating a wider range of market participants and reflecting the dynamic nature of the financial markets. As a result, the FTSE UK Index Series is now poised to offer a more representative and diversified view of the UK’s financial ecosystem, encompassing a broader set of securities across different categories and segments.

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