How will the index composition of the FTSE Global Equity Index Series be impacted by the changes?

As FTSE Russell transitions to its updated listing regime, the mapping of securities from the legacy Premium and Standard segments to the new categories—Equity Shares (Commercial Companies), Equity Shares (Transition), Equity Shares (International Commercial Companies Secondary Listing), and Closed-Ended Investment Fund categories—has been implemented seamlessly. This transition ensures that there is no immediate impact on the index composition on the day the new regime takes effect. 

The restructuring aligns the previous segments with the new categories, maintaining continuity for investors and ensuring that the FTSE Global Equity Index Series (GEIS) reflects the updated market structure without disrupting existing index compositionsFor example, AstraZeneca PLC (AZN) and Barclays PLC (BARC), which were previously listed under the Premium and Standard segments, are now classified under the Equity Shares (Commercial Companies) categoryThis mapping maintains their eligibility for inclusion in the FTSE GEIS, reflecting their ongoing significance in the UK and global markets. 

Despite the smooth transition, it is important to note specific conditions that affect index eligibilitySecurities classified as closed-end investments under the Industry Classification Benchmark (ICB) code 30204000 will remain ineligible for inclusion in the FTSE GEISInstead, these securities will continue to be eligible for the FTSE UK Index SeriesFor instance, Scottish Mortgage Investment Trust PLC (SMT), which falls under this ICB classification, will not be included in the FTSE GEIS but will still be a part of the FTSE UK Index SeriesThis distinction ensures that the index compositions accurately reflect the criteria set forth for each index series while accommodating the specific characteristics of closed-end investment funds. 

The updated regime aims to enhance the alignment of the FTSE UK Index Series with global market practices while providing a clear pathway for companies and investment vehicles to be included in the appropriate indicesBy automatically mapping securities to the new categories without affecting the existing index composition, FTSE Russell ensures stability and continuity during this transition periodThis approach minimizes disruption for investors and companies alike, allowing for a smooth adaptation to the updated regulatory framework. 

The Equity Shares (Commercial Companies) category, in particular, represents the core segment for UK-listed companies meeting high governance and liquidity standardsCompanies such as Unilever PLC (ULVR), with significant global operations and a strong UK presence, benefit from being classified under this categoryThe new regime’s focus on maintaining high standards ensures that companies listed in this category, including those transitioned from the legacy Premium segment, continue to be represented accurately in the FTSE GEIS. 

Similarly, the Equity Shares (Transition) category accommodates companies undergoing changes in their listing status or market segmentsThis category provides flexibility for companies like GlaxoSmithKline PLC (GSK) as they adjust their listing arrangements to align with the new regimeThe Transition category ensures that companies in this phase can maintain their eligibility for inclusion in the FTSE GEIS while navigating their evolving market positions. 

For international companies maintaining a secondary listing on the LSE, the Equity Shares (International Commercial Companies Secondary Listing) category offers a streamlined path for index inclusionAlibaba Group Holding Limited (BABA), for instance, may leverage this category to remain visible in the FTSE GEIS while focusing primarily on its primary market outside the UKThe revised regime provides a clear route for such companies to benefit from the exposure provided by FTSE indices without needing to relocate their primary listings. 

The Closed-Ended Investment Fund category continues to cater to funds that invest in a range of assets and offer shares to the publicCompanies like F&C Investment Trust PLC (FCIT), which are classified under the closed-end investments ICB code, will remain part of the FTSE UK Index SeriesThis category ensures that investment funds with closed-ended structures can be accurately represented while maintaining eligibility for the FTSE UK Index Series rather than the FTSE GEIS. 

Overall, the transition to the new listing regime has been designed to maintain stability and continuity for index compositions, ensuring that there is no immediate impact on the FTSE GEISThe automatic mapping of legacy segment securities to the updated categories preserves the integrity of the indices while accommodating the new regulatory frameworkBy clearly delineating eligibility criteria and maintaining separate pathways for different types of securities, FTSE Russell’s updated regime supports a more flexible and responsive index system, reflecting the evolving landscape of global capital markets.