Under the proposal, Foreign Exempt companies listed on Australian Stock Exchange will be eligible for index inclusion, provided the primary listing of the stock is on a major exchange within a developed market. Foreign Exempt companies will still be required to meet all the standard index inclusion criteria in the S&P Index methodology.

Companies with a Foreign Exempt classification are obligated to immediately provide ASX with all information that is both supplied to their home exchange and that is public. The classification seeks to avoid regulating companies in areas that are already well regulated by the rules of the overseas primary market. Current index methodology extends index eligibility to Foreign Domicile companies, but Foreign Exempt companies are not eligible. The ineligibility of Foreign Exempt companies – due to previously held concerns about the nature and timing of disclosure of corporate actions – is an anomaly for companies listed on developed markets whose disclosure requirements for corporate actions are comparable with those of Australian Stock Exchange.

The change is not expected to have an immediate impact on the index constituency but it will create a more favourable environment for the listing of international companies in Australia, giving Australian investors access to broader investment opportunities on the local market.

Should the proposal be adopted, an amendment would be made to index methodology to state that “Foreign Exempt ASX-listed companies will be eligible for index inclusion provided their primary overseas listing is from a developed market exchange.”

S&P’s Associate Director Simon Karaban said, “This is a minor enhancement to the methodology that will advance the practicality of the index rules and expand the pool of eligible index companies.” ASX General Manager Equity Markets, Richard Murphy, said, “This change removes a key impediment to large international listings on Australian Stock Exchange. Australian fund managers, investment banks, brokers and ASX all have a strong interest in growing the international side of ASX-listed equities so that our market keeps pace with the growth in Australian superannuation.” -- www.asx.com.au