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NYSE to recalculate Composite index as basis for ETF

The New York Stock Exchange (NYSE) plans to rebalance its broad-based Composite index, in a move that should herald the introduction of an NYSE Composite exchange-traded fund (ETF) later this year.

The US exchange said from January 9 it would remove closed-end funds, ETF derivatives, beneficial interest shares, unit trusts and limited partnerships from the Composite index to ease concerns about double-counting components.

It will rebalance the index – along with partner Dow Jones Indexes – to a base value of 5,000, with stock weightings being based on a new float-adjusted market capitalisation weighting formula. This ‘float’ component accounts only for shares that are actively trading.

The NYSE Composite will include 1,689 US stocks and 385 stocks from the rest of the world. Its market capitalisation of $12 trillion accounts for 57% of the world’s total market capitalisation.

NYSE confirmed the index would form the basis of an ETF, but failed to provide a specific timeframe for its launch, stating only that it would happen in the “near future”.

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