The Irish Stock Exchange has confirmed, after consultation with market participants, that it will move to a free-float calculation methodology, which determines the representation of a stock by the amount of shares that a company has available for trading.
The new method will come into force on June 18th, and will bring the ISEQ in line with best international industry practice.
The ISEQ says it ensures investors are not at a disadvantage when trying to match the constituent weighting of a stock where a big portion of issued shares are not available for trading, as they are held by interested parties or long-term strategic shareholders.
The ISEQ says the new calculation encourages investment as some investors are now restricted to free-float indices, and also under the Markets in Financial Instruments Directive (MiFiD) the index needs to have a free-float mechanism in place before November 2007.
The ISEQ considers the following shares as non free-float shares: shares held by management and board members, shares held by corporations and
Employee Share Ownership Plans (ESPO's), shares held by Governments, Investment funds and Banks.
