KARACHI, June 16: Karachi Stock Exchange (KSE) has decided to run the current full capitalisation of KSE-100 index as well as the free-float based new index in parallel for the next 90 days for comparison purposes and for any adjustments/re-balancing that might be required by investors/funds in their portfolios due to this modification.

According to KSE here on Friday, the KSE-100 (free-float) shall replace the KSE full-capitalisation 100 index thereafter at the time of next scheduled re-composition of the Index on October 1, 2012.

Karachi Stock Exchange  further said that the rules for composition and re-composition of the new index shall remain unchanged.

The only difference of the new index is the selection and computation of the index on the basis of free-float market capitalisation instead of the total market capitalisation of the existing index.

It may be noted that the governing board of directors of the exchange in its meeting held on April 24, 2012, had reviewed the subject matter and as recommended by the Karachi Stock Exchange index committee and decided to approve the introduction of a new 100-index based on a free float capitalisation method.

This methodology is a variation of the market capitalisation method used for our current (KSE-100) Index. This methodology instead of using selected companies' total outstanding shares, shall calculate the Index using their free-float, or shares that are readily available for trading.

Details of this methodology and migration plan to free-float Index are available on KSE's website.

The free-float market capitalisation method is regarded as the industry best practice.—APP