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PSE approves new criteria for key index composition
Posted: 3:33 PM | Mar. 14, 2006
XFN-Asia
THE PHILIPPINE Stock Exchange (PSE) said its board approved a change to its 30-company benchmark index that would see companies included based on their free float capitalization rather than the present criteria of full market capitalization.
The change is due to take effect by April 3.
Under the planned change, companies will have to have at least 10 percent of their issued capital made available to the public.
The board also agreed to rename the index, currently known as the PSE Composite Index, as the "PSEi".
PSE president Francis Lim said in a statement that the adoption of the free float scheme would encourage listed companies that wish to be included in the PSEi to increase their free float shares -- or shares freely available to the public.
The move is designed to enhance liquidity in the market, which should increase the level of transactions.
The PSE has said the current criteria for inclusion in the index has resulted in some "distortion" as companies with large market capitalization but low free floats have had a big influence on the index even when a considerable percentage of their shares are not being traded.
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