Methodology Change | Solactive MLP Composite Index & Solactive MLP Composite Index (Price) | Effective Date 15th January 2020

Today, on the 27 December 2019, Solactive announces the following changes to the methodology of the following indices (the ‘Affected Indices‘):

Rationale for methodology change

Solactive has determined that in a rapidly changing MLP space the universe selection pool should be enhanced to guarantee a minimum number of index constituents.

Changes to the Index Guideline

The current wording in Section  2.1 of the index guideline is replaced with the following wording:

The initial composition of the Index as well as any ongoing adjustment is based on the following rules:

On the Selection Days, Solactive AG provides the Selection Pool.

The companies in the Selection Pool are ranked according to their Market Capitalization. The company with the largest Market Capitalization is assigned rank number 1, the company with the second-largest Market Capitalization rank number 2 etc. The companies with the highest ranks are then chosen as Index Components and the new index composition determined this way is valid starting immediately following the Adjustment Day. For clarification, rank number 1 is higher than rank number 2.

The minimum number of Index Components is 20 and the maximum number of Index Components is 40. The Committee may decide to increase the maximum number of Index Components on a Selection Day. In case the rank assigned to a company which is currently an Index Component on a Selection Day is not sufficient to be selected as an Index Component, it shall only be removed from the Index if its rank exceeds the maximum number of Index Components by more than five ranks. The company with the lowest rank which is selected as an Index Component on this Selection Day but which is not currently an Index Component on the Selection Day is not included in the Index in this case. If there are less than 20 companies that fulfil the criteria for the selection pool (see chapter 4), the Committee can decide to include companies that do not meet all the liquidity criteria to reach 20 index components.

In chapter 4 “Definitions” the definition of  “Selection Pool” is  changed as follows:

From:

“Selection Pool” in respect of a Selection Day are those companies that fulfill the following conditions:

[…]

(d) Market Capitalization of at least 1000 million USD for companies which are not Index Components on the respective Selection Day, at least 750 million USD for companies which are Index Components on the respective Selection Day

 (e) Average daily trading volume in the last three months of at least 1,000,000 USD for companies which are not Index Components on the respective Selection Day, at least 750,000 USD for companies which are Index Components on the respective Selection Day

[…]

To:

“Selection Pool” in respect of a Selection Day are those companies that fulfill the following conditions:

[…]

(d) Market Capitalization of at least 750 million USD for companies which are not Index Components on the respective Selection Day, at least 500 million USD for companies which are Index Components on the respective Selection Day

(e) Average daily trading volume in the last three months of at least 750,000 USD on the respective Selection Day

[…]

Defined terms used in this announcement, but not defined herein, have the meaning assigned to them in the respective index guideline of the Affected Indices. The amended version of the index guideline will be available on the effective date.