Shanghai Revises Rules for Four Stock Indexes, Caps Individual Stock Weights at 15%

On Monday, four Shanghai stock indexes had revised rules.

The new rules cap constituent weights at 15 percent and allow risk warning shares to be removed earlier.

The changes cover the Shanghai Composite, SSE A-Share, SSE Free Float, and STAR Composite indexes and derivatives.

Risk-warning shares will be removed on the trading day after the second Friday of the month under the new rules. The timetable used to be based on warning time. When announcement and implementation occur in different months, removal can occur a month earlier.

Individual stock concentration is limited by weight. Weighting factors will be reviewed monthly and when new constituents exceed the ceiling. Adjustments to constituent weights and eligibility may require portfolio rebalancing for index funds.