S&P Dow Jones Indices Consultation on the Treatment of Spin-offs with Long Lead Times and Uncertain Valuations

1. • In scenarios where the expected value of a spin-off entity is expected to be immaterial, which option do you prefer?
   • Treat the action as de minimis and do not recognize it in the index.

     Add the spin-off entity to the index in accordance with the zero-price spin-off approach.
2. • In scenarios where a spin-off entity is an ineligible security type, but the value is expected to be material, which option do you prefer?
   • Treat the action as de minimis and do not recognize it in the index.

     Add the spin-off entity to the index in accordance with the zero-price spin-off approach.
3. • In scenarios where the expected value of a spin-off entity is uncertain, but expected to be significant, and when there is a significant gap between the ex-date and distribution, should spin-offs be added to indices?
   • Yes

     No
4. • If the spin-off is added on the ex-date, how should it be valued between the ex-date and the first trading date?
   • At a zero price.

     At an estimated price: The parent’s closing price the night before the ex-date less the opening price of the parent on the ex-date.

     At an estimated price: The parent’s closing price the night before the ex-date less the parent’s closing price on the ex-date.

     At a different estimated price (please specify in question 7 below).
5. • If the spin-off is added on the ex-date and there is no guidance issued for when trading may begin, how long should it be kept in the indices?
   • 20 trading days

     The greater of 20 trading days or until the next rebalancing.

     A different period (please specify in question 7 below).
6. • Should any changes be adopted as a result of this consultation, do you have any concerns regarding a possible implementation date (please specify)?
7. • Do you have any other comments or feedback regarding the proposed changes outlined above?

Please be advised that all comments from this consultation will be reviewed and considered before a final decision is made; however, S&P DJI makes no guarantee nor is under any obligation to comply with any of the responses. The survey may result in no changes or outcome of any kind. If S&P DJI decides to change the index methodology, an announcement will be posted on our website.

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