Consultation Free Float Velocity rule PSI 20
This proposal concerns a potential change to the minimum Free Float velocity rules applied for the PSI 20 at the annual review.
At present the minimum free float velocity is 25%, which is one of the highest within Euronext. Since trading has diffused over several venues – driven by regulatory changes a lower threshold for the PSI 20 could be implemented while preserving a tradable index portfolio.
In order to be able to keep a balance between selecting the most representative companies and preserving a highly tradable set of companies Euronext proposes to lower the minimum Free Float velocity to 15%.
Euronext believes 15% could be a suitable threshold for the Portuguese market, but would like to obtain confirmation from stakeholders via this consultation.
In the interest of keeping the index representative for the Portuguese market, Euronext also proposes to allow a maximum of 2 Companies included in the index that have a Free Float Velocity between 10% and 15%.
In order to obtain your feedback we would like to invite you to answer the following questions:
The free float velocity is a liquidity measure comparing the number of traded shares with the number of listed shares available for trading (free float).
The data relevant for his analysis are based on one year trading up to the Review Cut-Off date. The free float is based on the current Free Float Factor, with the notion that at least 25% is applied as Free Float Factor in this calculation.
Companies that fail to meet the free float velocity requirement cannot be added to the PSI 20 and will be removed at the annual review in March.