Move To Revise ASPI Approved By The CSE Board Of Directors
Posted 17,November

By Chaveendra Dunuwille

In Local News

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The transition from Full Market Capitalization Weighing to Free-Float adjusted Market Capitalization was approved by the Board of Directors of the Colombo Stock Exchange, and reports state the change will take effect in January 2022. However, an exact date has yet to be specified. 

The Free Market Capitalization Weighing system currently implemented in the CSE is based on the total market capitalization of listed companies. It considers 100% of the issued quantity of company share irrespective of the public holding percentage. While the system considers both voting & non-voting shares of listed companies, it does not take into account the liquidity and actual tradability of each security. This has sometimes resulted in the ASPI movements being inconsistent with actual price fluctuations. 

The CSE commenced revising its index methodology back in July 2021, and the revision comes after conducting reasonable amounts of testing dating back to December 2013. 

The new Free-Float-Adjusted Index will only consider the tradable portion of the issued quantity of securities. Upon its eventual implementation, the ASPI will move from the same value it closed the day prior and prevent any sudden shifts in the index.