The Philippine Stock Exchange (PSE) has approved revisions to its index management policy that introduce stricter eligibility and liquidity standards while easing the minimum public float requirement for some of the country's largest listed companies. The changes will take effect during the February 2027 index rebalancing.

The exchange said in a Tuesday circular posted to its website the revisions are intended to align the PSE Index Series with global standards and evolving market practices.

One of the key changes is the adoption of a 98-percent cumulative market capitalization threshold as a new screening criterion for index inclusion. Previously, companies were ranked by market capitalization but were not required to fall within a specified share of the market's total capitalization. 

Under the revised policy, only companies within the top 98 percent of the cumulative market capitalization of eligible securities may qualify for inclusion in the PSE Index, PSE Dividend Yield Index, PSE MidCap Index and sector indices.

The PSE is also overhauling how it measures stock liquidity. The exchange will replace its existing single liquidity criterion with two new measures—the Median Trading Activity Ratio (MTAR) and the Monthly Average Daily Value Turnover (MADV). The new framework evaluates both how frequently and how heavily a stock is traded, with companies required to meet both thresholds to qualify for most indices.

Another major revision introduces an exception to the minimum public float requirement. While companies generally need a 20-percent public float to qualify for index membership, firms with a market capitalization of at least P250 billion may now be included with a 15-percent public float, provided they meet all other eligibility requirements. The change is expected to provide greater flexibility for large-cap companies with relatively concentrated ownership structures.

The updated policy retains the PSE's semiannual review of index constituents, with rebalancing conducted every February and August based on a rolling 12-month review period. The exchange said implementing the revised methodology in February 2027 will give investors, listed companies and other market participants ample time to prepare for the new rules.