Scientific Beta

ERI Scientific Beta has amended its liquidity screen measurement to reflect market changes in its methodology, and has also adjusted its regional classification to mirror the latest changes in national economies.

ERI Scientific Beta would like to draw attention to the following changes: 

• ERI Scientific Beta Universe Construction: Change in Liquidity Measure
  
  An increasing number of companies have decided to extend their domestic market and increase the liquidity of their stocks by being listed on several markets. This trend is becoming more and more pronounced in some parts of the world where cross- and multi-listing are a common framework.
  
  As a leading index provider, Scientific Beta has decided to reflect these market changes in its methodology in order for the investability and capacity level of its indices to remain in line with reality.
  
  Scientific Beta has thus amended its liquidity screen measurement. The measure of ADDTV for multi-listed securities will take into account the trading volume on the three most liquid eligible exchanges.
  
  This change in methodology will be applied as of the 2014 December universe review. In accordance with our correction policy for track records, this will be applied going forward only, and will therefore not modify track records established before 22 December 2014.
  
  A detailed description of the liquidity measure is available in section 5.2 of the Scientific Beta Universe Construction Rules. 
  
  
• ERI Scientific Beta Regional Classification: Changes to the Watch List
  
  ERI Scientific Beta, as a leading index provider, aims to build and publish indices that reflect the latest market trends, taking into account investor sentiment and concerns. Part of this commitment is to maintain, over time, a regional classification that mirrors the latest changes in national economies.
  
  The Scientific Beta regional classification methodology is detailed in section 2.0 of our Universe Construction Rules. In application of these rules, Scientific Beta announces that Greece and Korea have been added to its watch list for a potential reclassification from Developed to Emerging Markets. 
  
  Greece:  Greece has been added to the Scientific Beta watch list, as this country fails to qualify on several market size and liquidity criteria. In particular, Greece does not fulfil the criteria of having a minimum aggregated domestic total market capitalisation (average of three years) of USD 60 billion.
  
  South Korea: The South Korean equity market meets most of the Developed Markets criteria of the ERI Scientific Beta Regional Classification Methodology, especially in the areas of economic development, market size and liquidity. However, since the introduction of new criteria assessing potential barriers to entrance into the local market, Korea is no longer eligible to be classified as a Developed country. Indeed, the limited convertibility of the Korean Won is commonly recognised and does not reflect the characteristics of a free-float currency in terms of convertibility.
  
  In keeping with our schedule, the confirmation of Greece’s and South Korea’s classification will be announced in December to be implemented in the 2015 June review. In accordance with our correction policy for track records, this would be applied going forward only, and would therefore not modify track records established before 22 June 2015.