S&P Dow Jones mulls changing eligibility for two preferred indexes

By Wendy Van Sickle

Columbus, Ohio, May 4 – S&P Dow Jones Indices is consulting with members of the investment community on potential changes to the volume eligibility factor for the S&P U.S. Preferred Stock index and the S&P International Preferred Stock index, according to a notice.

The proposed new volume criteria for both indexes stipulate that preferred stocks that have traded more than $6 million per month over the previous six months are eligible for inclusion. Issues with fewer than six months of trading history would be evaluated over the available period and may be included should size and available trading history infer the issue will satisfy the requirement, the notice said.

Current constituents that have not traded more than $2.5 million per month over the previous six months as of the rebalancing reference date would be excluded from the index. However, no issue would be removed from the index for violating this requirement for the first 12 months following its addition effective date.

Right now, for each index the threshold for inclusion is at least 250,000 shares per month over the previous six months. Issues with fewer than six months of trading history are evaluated over the available period and may be included should size and available trading history infer the issue will satisfy this requirement.

For exclusion from the index, current constituents must not have traded 125,000 shares per month over the previous six months as of the rebalancing reference date in the case of the U.S. index. The figure is 100,000 shares per month on average for the international index.

S&P Dow Jones noted that the indexes serve as the universe for other preferred stock indexes and said the S&P U.S. High Quality Preferred Stock index, the S&P Enhanced Yield North American Preferred Stock index and the S&P/TSX North American Preferred Stock index could also be affected by the proposed changes.

S&P Dow is surveying members of the investment community on whether they agree with the changes through June 9.

Feedback is to be submitted to index_services@spglobal.com.

S&P Dow Jones Indices is a New York-based provider of index-based concepts, data and research.

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