S&P Dow Jones Indices Announces Methodology Updates for Share Freeze Period, Tracking Stocks Eligibility, Exchange Offers & Special Dividends

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Aug 01, 2016, 06:16 ET

NEW YORK, Aug. 1, 2016 /PRNewswire/ -- S&P Dow Jones Indices today announces updates to the S&P U.S. Indices methodology:

Share Freeze Period: Effective immediately, S&P Dow Jones Indices (SPDJI) is updating its quarterly rebalance share freeze period to provide greater transparency and clarity to clients regarding the freeze period surrounding the major quarterly rebalances. Previously, SPDJI implemented a share freeze the week leading up to the rebalancing effective date. Under the updated methodology, the freeze period begins after the market closes on the Tuesday preceding the second Friday of each rebalance month (March/June/September & December) and ends post market close on the third Friday of a rebalance month. This updates gives clients a clear reference date for changes that will be included in an upcoming rebalance.

Eligibility of Tracking Stocks: As a result of feedback received from a recent consultation, SPDJI will include all eligible existing tracking stocks in S&P Total Market Index (SPTMI) effective with the September, 2016 rebalance. Previously, tracking stocks were ineligible for S&P US Indices. This change helps align the SPTMI with the S&P Broad Market Index (SPBMI) and other broad based indices, which already include tracking stocks. Please note that any tracking stock issued as a result of a mandatory event will be permanently added to SPTMI on the ex- date.

Tracking stocks will continue to be ineligible for inclusion in the S&P Composite 1500 (which includes the S&P 500, S&P MidCap 400 & S&P SmallCap 600). Owners of tracking stocks typically do not have any legal claim on a company's assets, and tracking stocks do not have any separate corporate governance or management structures. Therefore, the U.S. Index committee deems them to be ineligible for the S&P Composite 1500.

Treatment of Voluntary Exchange Offers, Dutch Auctions & Tender Offers: Effective immediately, changes in a company's total shares outstanding of 5% or more due to voluntary exchange offers, Dutch auctions & tender offers will be made weekly rather than as soon as reasonably possible, which is the current policy. This is being done to align practices globally and to ensure replicability and appropriate lead time for implementation of these non-mandatory event types.

Reference date for additions to SPTMI: Effective with the September, 2016 rebalance, the reference date for IPO inclusions in SPTMI will be five weeks prior to the effective rebalance date and additions will be effective at the open of Monday following the third Friday of March, June, September and December. Previously, the reference date was the last trading day of the month prior to rebalance. This change helps align the SPTMI with the SPBMI and other broad based indices which already use this reference date.

Special Dividends: Based on consultation feedback, SPDJI will not be changing its treatment for special dividends. However, to provide for additional transparency and clarity, SPDJI will generally consider the third consecutive instance of a non- ordinary dividend (in terms of timing, not amount) to be ordinary for index purposes as a third consecutive instance will now be considered to be part of the normal payment pattern established by the company.

Following is a summary of changes:

Change	Current Methodology	New Methodology
Share Freeze period will begin after the market closes on the Tuesday preceding the second Friday of each rebalance month (March/June/September & December) and will end post market close on the third Friday of a rebalance month.	S&P Dow Jones U.S. Indices implements a share freeze the week leading up to the rebalancing effective date	A share/IWF freeze period is implemented during each quarterly rebalancing. The freeze period begins after the market closes on the Tuesday preceding the second Friday of each rebalance month (March/June/September & December) and ends post market close on the third Friday of a rebalance month.
Tracking Stocks will be eligible for inclusion in SPTMI, but will continue to be ineligible for inclusion in S&P Composite 1500	Tracking stocks are ineligible for US Indices	S&P Dow Jones Indices (SPDJI) will include tracking stocks in S&P Total Market Index (SPTMI) effective with the September, 2016 rebalance. Tracking stocks will continue to be ineligible for inclusion in the S&P Composite 1500.
Voluntary exchange offers, Dutch auctions and tender offers will be implemented with the weekly share updates	Changes in a company's total shares outstanding of 5% or more due to exchange offers, Dutch auctions & tender offers are made as soon as reasonably possible	Changes in a company's total shares outstanding of 5% or more due to exchange offers, Dutch auctions & tender offers are made weekly
Reference date for additions to SPTMI will be five weeks prior to the effective rebalance date	Reference date was the last trading day of the month prior to rebalance.	The reference date for IPO inclusions in SPTMI will be five weeks prior to the effective rebalance date and additions will be effective at the open of Monday following the third Friday of March, June, September and December.
Special Dividends: Clarification of when SPDJI considers a non-ordinary dividend to be ordinary for index purposes	Special dividends are those dividends that are outside of the normal payment pattern established historically by the corporation.	SPDJI will generally consider the third consecutive instance of a non- ordinary dividend (in terms of timing, not amount) to be ordinary for index purposes as a third consecutive instance will now be considered to be part of the normal payment pattern established by the company.

Please refer to the S&P U.S. Indices Methodology and the S&P Equity Indices Policies and Practices Methodology for further details. For more information about S&P Dow Jones Indices, please visit www.spdji.com.

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S&P Dow Jones Indices is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies, and governments to make decisions with confidence. For more information, visit www.spdji.com.

FOR MORE INFORMATION:

David Blitzer
Managing Director and Chairman of the Index Committee
New York, USA
(+1) 212 438 3907
[email protected]

Soogyung Jordan
Global Head of Communications
New York, USA
(+1) 212 438 2297
[email protected]

SOURCE S&P Dow Jones Indices