| Capital transaction | Explanation | Change in adjustment factor |
|---|---|---|
| Stock split/ Stock consolidation | In a stock split, the current number of shares of a corporation is increased by a specific ratio. The corporation’s authorized capital and the total value of the shares remain unchanged. A stock consolidation is the opposite of a stock split. | No1 |
| Listing expansion | When a company expands its listing, the number of shares – and thus the listed share capital – increases. | Decreases |
| Issuance of bonus shares | Bonus shares are issued when the corporation carries out a capital increase using the company's own funds. Unlike an ordinary capital increase, existing shareholders do not have to pay anything for the new shares, since this is merely a conversion of undistributed retained earnings into share capital. | No1 |
| Subscription rights discount on capital increases | A special right of first refusal or subscription ensures that, following capital increases or capital adjustments, a shareholder’s previous shareholding is maintained. This right is tradable during a specific period. | Increases |
| Capital reduction | A capital reduction results in a reduction in share capital and, consequently, in equity. (Reduction of the par value, share buyback, and cancellation of shares) | Increases |
| Dividend discount | The portion of a public company’s reported profit that is paid out to shareholders (not relevant for price indices). | Increases |
| Fast Entry/ Fast Exit | Typically, additions and removals from the index are made only as part of regular adjustments. In exceptional cases, a so-called “fast entry” may also occur. If, for example, there is a large new issue during the year, the stock may be added to the index ahead of schedule. If, on the other hand, an index member experiences a dramatic deterioration in its business environment, the “fast exit” rule allows the stock to be removed from the index relatively quickly. | Increases or decreases |
1 Rounding differences may result in minor changes to the correction factor.
What are stock market indices?
Definition
Index types
Types of weighting
Requirements for an index
Index classification criteria
Can I trade an index?
