FTSE Russell to align free-float rules for UK, foreign firms

FTSE Russell to Harmonize Free-Float Rules in UK Index Series by 2026

FTSE Russell Announces Alignment of Free-Float Requirements

Overview of the Upcoming Changes

March 26 (Reuters) - Index provider FTSE Russell said on Thursday it would align the minimum free-float requirement for UK and non-UK companies in the FTSE UK Index Series from the June 2026 review.

Details of the Free-Float Requirement

Under the change, companies incorporated inside or outside the UK will need at least 10% free float to qualify for inclusion in the FTSE UK Index Series. Non-UK companies currently face a 25% minimum free-float requirement.

Rationale Behind the Harmonization

FTSE Russell, a London Stock Exchange Group business, said the change removes the gap between UK and foreign companies and makes the indices better reflect real market exposure. The rule is also in line with the London Stock Exchange's minimum free-float requirement.

Expected Impact on Index Constituents

"While we do not expect any immediate impact on index constituents, this change aims to strengthen how accurately the indices reflect the UK market," David Sol, global head of policy at FTSE Russell, said in a statement.

Related Developments in Index Inclusion Rules

Proposed Fast-Entry Mechanism for IPOs

In February, FTSE Russell also proposed a "fast-entry" mechanism for IPOs and changes to eligibility criteria for its Russell U.S. Equity Indexes, as market expectations indicated some forthcoming listings may not meet the current thresholds.

Peer Initiatives: Nasdaq's New Rule Proposal

Peer Nasdaq also proposed a new rule last month to speed up the inclusion of newly listed large companies in its index, seeking to address delays that have left major IPOs and exchange transfers out of the benchmark for months.

(Reporting by Aatrayee Chatterjee in Bengaluru; Editing by Shailesh Kuber and Maju Samuel)