The SMI market consultation is available here for all market participants from here from 7 September to 7 November 2023. SIX is consulting the market on whether the number of components of the SMI should increase from 20 to 30, and if the Free Float Market Capitalization over 12 months should be employed as the sole selection criterion for the SMI, SMIM and SLI. The currently used 12 month order book turnover would be no longer applied for the SMI, SMIM and SLI.
Corresponding suggestions have been voiced in the market in the past. A number of larger spin-off and IPO events in recent years has increased the overall capitalization and the liquidity of the Swiss equity market. This supported the start of preparations for a proposal to increase the number of SMI constituents to 30 and thereby optimize the representation of the market in terms of both coverage and diversification. The consultation aims to gauge stakeholders’ views on whether the index would benefit from an increased number of components, or if the current size of 20 stocks would suffice.
As a consequence of the proposed change in the number of SMI components, other SIX indices that are dependent on the SMI composition would be impacted as well. The SPI 20 (all SMI companies without the 18% weighting limit) would be renamed to SPI30 with 10 more stocks. The companies added to the SMI / SPI 30 would transition from the mid-cap indices, therefore the SMIM index would no longer contain companies ranked from 21 and 50, but from 31 to 60 instead. The SPI Extra index, which covers the overall Swiss equity market excluding the SMI companies, would decrease by 10 components (i.e. the 10 additions to the SMI). The SMI Expanded, which comprises all components of the SMI and SMIM indices, would increase the number of components to 60.
The market feedback helps SIX assess the potential implications of the changes and ensure that unintended consequences are minimized.
A final decision on if, how and when the proposed changes are implemented will be made after considering the feedback and conducting further analysis. The ambition of SIX is to communicate the results of the consultation and potential changes to the index methodologies in January 2024. In addition, sufficient lead time will be allowed for the implementation of any potential changes.
Please find an overview of the proposed adjustments here.