As many readers of this publication know, in late July 2017, each of S&P Dow Jones Indices ("S&P") and FTSE Russell announced changes to their index methodologies relating to companies with multiple share class structures. These changes followed consultation results that were published earlier this year.

Effective July 31, 2017, the S&P Composite 1500 and its component indices (the S&P 500, S&P MidCap 400, and S&P SmallCap 600) will no longer include companies with multiple share class structures, such as Snap Inc. and Blue Apron Holdings, Inc. Existing constituents of the indices, including Facebook, Inc. and Alphabet, Inc. (Google), will be grandfathered in and will not be affected by the methodology change.

Effective at the September 2017 quarterly and semi-annual index reviews, FTSE Russell announced changes to the methodology of all FTSE Russell indices, requiring developed-market constituents to have greater than 5% of the company's voting rights held by unrestricted (free-float) shareholders. Companies with less than 5% ownership will be ineligible for index inclusion. The rule will apply with effect from September 2022, affording a five-year grandfathering period to allow current consistent companies to change their capital structures to comply with the revised requirements.

 These changes reflect the criticisms of those market participants and observers who are opposed to the limitations that these type of equity structures place on the influence of public shareholders. However, to the extent that these indices are designed to represent in part the securities of recent IPOs that qualify for inclusion, these indices will cease to account for these types of companies. In this respect, these indices will not necessarily be fully representative of the market segments that they were initially designed to track. The structured notes and structured CDs will similarly cease to have exposure to these types of companies.