Methodology Change | Solactive MLP Infrastructure Index | Effective Date 17th December 2018
Today, on 19th of November, 2018, Solactive announces the following changes to the methodology of the Solactive MLP Infrastructure Index (DE000SLA4HN3, DE000SLA4HM5).
Due to changes in the market environment in relation to MPL´s Solactives Oversight Committee had decided, inter alia, to amend the index methodology and therefore, due to the fact that certain amendments are deemed to be material changes, to initiate a market consultation. The oversight committee has discussed the feedback of the market and has decided to change the methodology of the Solactive MLP Infrastructure Index.
Taking this into account, the oversight committee has decided to amend chapter 2.1 “Selection of the Index Components”, chapter 2.3 “Extraordinary adjustment” as well as chapter 4 “Definitions” of the methodology of the Solactive MLP Infrastructure Index as follows:
The following sections in chapter 2.1 (Selection of the Index Components)
“On the Selection Days, Solactive AG provides the Selection Pool. The companies have to fulfil three conditions to be a constituent of the Selection Pool. The companies have a Free Float Market Capitalization of at least 2000 million USD, an average daily trading volume in the last three months of at least 2,500,000 USD and maintained or grown its distribution quarter-over-quarter for at least one of the trailing two quarters.
The minimum number of Index Components is 20 and the maximum number of Index Components is 30. If there are less than 20 companies that fulfil all three conditions, all companies that fulfil at least 2 conditions are in the Selection Pool. If there are more than 30 companies that fulfil all three conditions, the 30 companies with the highest rank are chosen.”
shall be deleted and replaced as follows:
“On the Selection Days, Solactive AG provides the Selection Pool.
All infrastructure MLPs which fulfil the index criteria as outlined in chapter 4 will be added to the index. If a company, which is not a current Index Component, has publicly announced a merger agreement to be acquired as of the Selection Day, it will not be considered eligible for the Selection Pool.
The required number of Index Components is 20 and the maximum number of Index Components is 30.
If there are less than 20 companies that fulfil the criteria outlined in chapter 4, the following criteria will be relaxed in the following order until the required number of 20 Index Components is reached:
- Minimum Free Float Market Capitalization is relaxed up to 1,000 million USD
- Minimum Average daily trading volume in the last three months is relaxed up to 2 million USD
- Maintained or grown its distribution quarter-over-quarter for at least one of the trailing three (instead of two) quarters
To clarify, the criteria is only relaxed step-by-step until there are 20 constituents to pass the criteria.
If there are more than 30 companies that fulfil the criteria defined in section 4 the 30 companies with the highest rank are chosen.”
In chapter 2.3 (Extraordinary adjustment) the entire section shall be deleted and replaced by the following:
“An extraordinary adjustment, if applicable, is triggered and applied in compliance with the rules set forth in the Solactive Guideline for Extraordinary Corporate Actions.
If a company included in the Solactive MLP Infrastructure Index is removed from the Index between two Adjustment Days due to an Extraordinary Event, if necessary, the Committee shall designate a successor, if the index would otherwise consist of less than 20 companies The successor will be given the weight based on its Free Float Market Capitalization (as of business day preceding the announcement by Solactive). The weight difference between the successor and the removed company will be distributed proportionally to the remaining Index Components. Based on these weights, the Fraction of Shares will be calculated as of the business day preceding the announcement by Solactive. These Fraction of Shares will be implemented on the effective date of the extraordinary corporate action (at least two business days after the announcement of the corporate action by Solactive).”
The reference in (a) of definition of “Selection Pool” In chapter 4 (Definitions):
- Listing on a regulated stock exchange in the form of shares tradable for foreign investors without restrictions.”
shall be deleted and replaced as follows:
- Listed on a regulated stock exchange in the United States.”
The reference in definition of Business Day In chapter 4 (Definitions) to “Stuttgart Exchange” shall be amended to a reference to New York Exchange”.
Solactive AG’s oversight committee is of the opinion that the suggested methodology changes do not compromise the index’ integrity and comparability. The changes were deemed material by Solactive’s oversight committee.
For clarification purposes, the following section will be included in chapter 1.5 (Weighting) between the second and third paragraph:
“The calculated Number of Shares as of the Selection Day are used and will be implemented as of the close on the Adjustment Day. To match the correct index level on the Adjustment Day, the Number of Shares will be multiplied with a constant Correction Factor, i.e. the Number of Shares will be up scaled or down scaled.
The Number of Shares as of the Selection Date are adjusted for any relevant corporate actions between Selection Day and Adjustment Day. This only relates to corporate actions that have a direct impact on the price and shares (i.e. stock splits, stock dividends, rights issues).
For clarification: The calculation of the weighting is based on the close market data as of the Selection Day”
The index guideline will be modified accordingly and the changes will be effective on 17th of December, 2018. The new index guideline will be available on this date.