MSCI to Announce Phase II of Free Float Changes

April 9, 2002 ( - On Thursday, Morgan Stanley Capital International (MSCI) will announce the final round of changes to its indices as it moves to a free float system.

The changes, which will take effect at the close of trading on May 31, mean that the MSCI will base the index weightings on the volume of shares available to the investing public, disregarding shares that don’t trade freely, such as those held by the government or family members.

In a bid to make the index family more representative of the markets, MSCI will also expand the market representation of its Standard Index series from 60% to 85% coverage, within each industry group within each country.

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Investors have had over a year to absorb the changes, since MSCI has kept the market informed to limit the changes on stock prices.

Almost a year ago, the index provider published provisional indices that showed the weightings on a free float basis to prepare the market for the change. In November 2001, the group implemented half the free float changes to all its indices.

According to MSCI estimates, $500 billion is directly linked to its indices and $3 trillion in funds worldwide are benched against them.