BEL 20 Index is the leading representative of aggregate price changes
on the Brussels Stock Exchange. Serving as an underlying for options and
futures contracts, it comprises 20 companies for which a continuous quotation
is available on the NTS Forward Market.
Similar to other stock indexes,
the constituent stocks of the BEL 20 Index are selected by ranking all
eligible stocks according to a composite criterion. In the Belgian case,
the ranking is obtained by computing the arithmetic average of the turnover
in and the market capitalization of each stock, with the former magnitude
accounting for 60% and the latter for 40% of the composite criterion.
Holding companies are not eligible for inclusion if their portfolio
consists by more than 75% of BEL 20 stocks or if they are not ranked
within the first 12 stocks. The constituents are not allowed to surpass
a 10% threshold of the total value of the index basket for more than
six consecutive months and limited to a maximum of 10% afterwards.
The sample of index stocks
is subject to an annual revision in December. For a stock that was formerly
not included in the index sample to displace a BEL 20 stock it is required
to pass two conditions: First, it must rank before the outgoing stock
and, second, the new stock must be ranked within the top 20 stocks for
at least 8 months out of 12, judging according to a monthly ranking.
This second condition is intended to enhance the stability of the index
sample since candidates must prove a constantly high liquidity of trading
before being eligible for inclusion. In some exceptional cases such
as the delisting of a stock, the composition can be adjusted on a quarterly
basis. If a constituent stock is suspended from trading for more than
2 trading days, the index steering committee is to consider a temporary
suspension of the index calculation.