Index Rebalancing Schedules Are Being Rewritten – Here’s How to Keep Track

March is traditionally one of the most important months of the year for index rebalancing, the process where index providers rebalance their stock indexes to reflect market changes. However, due to the current extreme volatility in global markets, many index providers are rethinking their rebalancing timelines. Some are pushing back their rebalancing delivery windows by a few days, while others are deferring them indefinitely.

Regular rebalancing is essential to the proper functioning of markets, as the process ensures that indexes are not unfairly weighted toward a particular sector or a small group of stocks. By deferring the present rebalancing cycle, index providers hope to secure breathing space for themselves and their clients and give the markets time to settle before making these critical calculations.

However, the shakeup of the rebalancing schedule presents a real challenge to the investment community. The schedule is usually set in stone, and investment managers have never before had to work around shifting dates and prolonged uncertainty. Accidently missing a rebalancing schedule change could leave investment strategies exposed to out-of-date market assumptions: a risk at any time, but never more so than when a market has suddenly shifted from ‘bull’ to ‘bear’ conditions.

As Zoe Lagerweij, Head of Client Services – Operations and Change, puts it: “Current market conditions are difficult enough without investment managers having to constantly track the news to see which index rebalancing schedules are on track and which are being postponed. That’s why we’ve taken immediate action to help, and are now providing clients with real-time index rebalancing schedule updates.

“Our initiative means that clients can focus on their core duties at this challenging time and rest assured that they will be alerted to any and all changes to rebalancing schedules, and that these changes will be communicated to all relevant internal audiences. To ensure these status alerts are as comprehensive and timely as possible, we’re working hand-in-hand with our data partners – the index providers themselves.”

As of writing, RIMES has been notified of a number of significant shifts to rebalancing schedules. These include from S&P, which is postponing its March rebalance for all indices excepting capped indices, and ICE, which is postponing its NYSE rebalance. Scibeta has also cancelled their quarterly rebalance, Markit is monitoring the situation and not currently making any changes. The FTSE rebalance is also proceeding as normal and MSCI’s next rebalance is not until May but will be closely monitored by RIMES. Nasdaq have just cancelled scheduled index reconstitutions and rebalances that were due to be effective March 23rd for all families apart from the Nasdaq Global index family.

RIMES Managed Data Services is a proven data operating platform that helps firms of all sizes and in all regions insulate themselves from the impacts of market volatility on indices. Contact us to learn more.

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