Free Float In Stocks:
Index provider MSCI said it has cut the free-float designations of four securities of India’s Adani group.
- The free float is also known as Public float which refers to the shares of a company that can be publicly traded and are not restricted.
- It generally excludes promoters’ holding, government / strategic holding and other locked-in shares, which will not come to the market for trading in the normal course.
- Free Float=(Outstanding shares-Restricted Shares-Closely held shares)
- Outstanding shares refer to the number of shares held by all of the company’s shareholders
- Restricted shares refer to shares that are not transferable until certain conditions are met. Restricted shares are generally held by corporate management, such as executives and directors.
- Closely-held shares refer to shares that are typically held onto for a very long-term basis. Examples include major long-term shareholders and insiders.
- Free Float Methodology is used to provide a more accurate reflection of market movements and stocks actively available for trading in the market.
- The free-float methodology has been adopted by many of the world’s major indexes.
- MSCI calculates free float-adjusted market capitalization for each security to calculate the weights of the securities in the MSCI indexes.