Bse Kicks Off Discussion On Free-Float-Based Indexing

The Bombay Stock Exchange (BSE) today kicked off a nationwide debate on the possibility of shifting its benchmark Sensex and other indexes to the free-float methodology. The current method is based on market capitalisation.

The issues that came up during the discussion pertained to the methodology for free-float constituent for calculating the free-float and the regulatory support needed to enforce tighter and clearer disclosure norms.

The objective of the round table was to generate a debate among the Indian market participants, mutual funds, foreign institutional investors as also regulatory agencies and academicians on issues relating to the applicability of free-float to stock indices in India.

The round table deliberated on other issues pertaining to index construction including international experience on free-float, major issues and imperatives in moving over to free float in the Indian capital markets.

The round table was chaired and moderated by Mark Makepeace, chief executive, FTSE, London. The panel speakers included Nagendra Parakh, chief general manager, the Securities and Exchange Board of India, Bharat Shah, chief investment officer, Birla Sun life AMC Ltd, and Ajit Surana, member, the Bombay Stock Exchange (BSE).

R Bhat, chief investment officer, Jardine Fleming Asset Management, Vineet Bhatnagar, managing director, Refco (India) Pvt Ltd, Krishnamurthy Vijayan, chief executive officer, JM Mutual Fund and Dr Manoj Vaish, deputy executive director, BSE.

In July 2001, BSE has launched a free-float based index, the BSE TECk Index, which closely tracks the performance of information technology, media and telecom sectors through a basket of 21 stocks listed on the BSE.