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Governance and Policy

FTSE consults market on nationality allocations in Hong Kong

At the end of 2011 we invited users of the FTSE All-World Index Series and FTSE Global Equity Index Series (FTSE GEIS) to participate in a market consultation on the nationality allocations of companies with no business connection with Asia (other than sales) taking an Asian listing. For stocks which list and trade in only one country, FTSE’s nationality rules for our Global Equity Index Series will, by default, assign the stock to that country. In a recent example, L’Occitane was assigned Hong Kong nationality. Similar stocks, including Prada, remain under consideration.

We are aware that investors hold mixed views on such nationality allocations. Users of the FTSE Global Equity Index Series are generally seeking access to all available investment opportunities and their prime concern is that the nationalities assigned to stocks should be congruent with the time zone in which they trade. In contrast, users of regional or local subsets of the Global Equity Index Series are more concerned that subsets such as ‘Asia’ or ‘Hong Kong’ encapsulate economic relevance to the region.

In order to better understand the views of our clients in Asia, we invited them to participate in a market consultation on this matter. The consultation has now closed, and the feedback will be presented to FTSE’s committees with proposals for any Ground Rules changes, and thence to the FTSE Policy Group for ratification. Any changes to the Ground Rules as a result of this process will be announced in due course.