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Informative Notice - 20220804 FTSE JSE Ground Rule Update
FTSE JSE Africa Index Series: Ground Rule Update
04 August 2022
FTSE Russell would like to inform clients of the following Ground Rule update to the FTSE JSE Africa
Index Series Ground Rules which is effective from the September 2022 index review.
Section 4: Index Construction
New Rule
4.3.5 Minimum free float
Companies will be eligible for index inclusion if their global free float is above 5%,
notwithstanding new Inward Listings which will be considered for All Share Inclusion using a
calculated SWIX free float as per Rule 4.3.7
4.3.7 New and newly eligible Inward Foreign Listings
In order to be considered for index inclusion, new Inward Listings with a global free float greater
than 5% and a SWIX investable market capitalisation less than 0.5% of the Small Cap Index on
the review cut-off date will have their SWIX Free Float adjusted such that the SWIX investable
market capitalisation equals to 0.5% of the Small Cap Index. This adjustment will only be done
during the first year of listing and thereafter, the SWIX free float will be updated based on the
actual Strate register number
Old Rule
4.3.5 Minimum free float - 5% or less
Companies with a free float of 5% or below are excluded from the index, notwithstanding foreign
companies which may be eligible under Rule 4.3.7.
4.3.7 Foreign ownership limits
Foreign ownership limits, if any, will be applied after calculating the actual free float restriction,
as detailed in Rule 4.3.5. If the foreign ownership limit is more restrictive than the free float
restriction, the precise foreign ownership limit is applied. If the foreign ownership limit is less
restrictive or equal to the free float restriction, the free float restriction is applied, subject to Rule
4.3.5.
Any company classified as an inward- listed share by National Treasury on 24 October 2011 will
have its free float adjusted to exclude non-South African shareholdings. Any share listed after 24
October 2011 that is classified as foreign, for index purposes, by the South African Reserve Bank
will be treated in the same manner. In order to be considered eligible for index inclusion, all
inward listings with a free float of 5% or less require an investable market capitalisation of 1% or
more of the investable market capitalisation of the FTSE/JSE Mid Cap Index on the review cut
date. In the event that a non-constituent meets this criteria for the first time, that company’s
free float will be based solely on the share register at the month end prior to the Review Cut Date
rather than a three month average basis. Inward listed companies with a free float of 5% or less
that are existing constituents of the Index Series will be deleted if their investable market
capitalisation falls below 0.5% of the FTSE/JSE Mid Cap Index.
Appendix B: Methodology for Capping Indices
Change in capping level for the following indices:
Index Index Name Based on Capping
Code Level
J141 Capped Shariah Top 40 Shariah Top 40 12%
J300 Capped Top 40 Top 40 12%
J303 Capped All Share All Share 12%
J430 Capped Shareholder Weighted Top Shareholder Weighted Top 40 12%
40
J433 Capped Shareholder Weighted All Shareholder Weighted All 12%
Share Share
New Rule on Group Entity Capping
To meet the requirements for capping two entities together, on review cut date:
· Both Company A and its related Company B must be listed on the JSE and be
constituents, or prospective review constituents, of the All Share index
· Consider the gross market capitalisation of Company A and the value of its holding in
Company B at prevailing market prices and the current cross-holding percentage
· If the market value of Company A’s holding in Company B is greater than 75% of the
total gross market capitalisation of Company A, then both companies should be
considered as a single entity for capping purposes in all Capped Indices in which both
entities are constituents
· If the value of Company A’s holding in Company B falls below 65% of Company A’s total
gross market capitalisation at a subsequent quarterly review, then the two entities will no
longer be capped as one entity
Group Entity Capping applies to all indices that have a fixed capping level based on an underlying
market capitalisation weighting or SWIX weighting. It does not apply to any equally weighted
indices or any non-market capitalisation weighted indices.
An updated copy of the FTSE JSE Africa Index Series Ground Rules (Version 7.9) is now available from
FTSE Russell: mailto:info@ftserussell.com
For further information please contact FTSE Russell Client Services at info@ftserussell.com or call:
Australia +1800 653 680
Hong Kong +852 2164 3333
Japan +81 3 6441 1440
London +44 (0) 20 7866 1810
New York +1866 551 0617
Alternatively please visit our website at www.ftserussell.com
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Date: 04-08-2022 05:05:00
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