TOKYO -- Nikkei on Monday compiled proposed changes to rules for calculating the Nikkei Stock Average and selecting its constituents.
The revisions would introduce a cap on the weight of constituents to keep the maximum weight under a certain level.
Aiming to accelerate the transition of the constituents, Nikkei would also increase the frequency of their periodic review and reshuffle, which has been conducted every fall, to twice annually through the addition of a spring review and reshuffle.
Nikkei plans to introduce the revisions in fall 2022, and aims to invite a broad range of public opinion before finalizing them.
The proposed capping system on the weight of the constituents would cut 10% from the share price used to calculate the index if the weight of the stock exceeded the specified threshold on the base dates of the periodic review. The initial threshold, to be introduced in the review this fall, would be set at 12% and then be reduced to 11% in the fall 2023 review and 10% a year later.
Comments will be accepted until June 27 on the Nikkei 225's official website, Nikkei Indexes (https://indexes.nikkei.co.jp/en/nkave/). The site contains detailed information about the changes, plus answers to frequently asked questions.