Riga Stock Exchange                                                             21.06.2005



Changes in rules of Baltic stock exchanges' indices



As a part of the integration of the Nordic and Baltic securities market, the Baltic stock 

exchanges will adopt the NOREX index rules as from July 1, 2005. The current rules of calculating 

BALTIX, RIGSE, TALSE and VILSE will be affected.



The Baltic stock exchanges will adopt the NOREX rules “Rules for the construction and maintenance 

of the NOREX Exchanges' All-share, Sector and Benchmark Indices”. The rules are available at 

<a href='http://www.norex.com' target='_blank'>http://www.norex.com</a> and on the websites of Baltic stock exchanges. 



In connection with the adoption to the NOREX rules some rule changes will be made regarding RIGSE, 

TALSE, VILSE and BALTIX. Below is the list of the major changes:



1) Reinvestments of dividends

In the current formula the dividend adjustment is made by adding the dividend amount to the price 

of the dividend-paying share in the numerator. In the new formula the dividend amount is subtracted 

from the share price in the denominator. In practice the change means that the adjustment in the new 

model takes place in the opening index basket on the dividend ex-date whereas in the current model 

the dividend is adjusted only after the first trade is made with the dividend-paying share. In the 

current model the adjustment for some illiquid shares can take place several days or even weeks after 

the ex-dividend date. The new model makes the dividend adjustment whether there were trades or not.



2) Introduction of the NOREX price algorithm

To represent the price of a share in the index formula, the following rules will be applied: 

- If an officially registered trading price for an index stock has not been quoted on the relevant 

trading day, the last quoted trading price shall be used in the calculation. 

- If a bid has been quoted that is higher than the last quoted trading price, the bid shall be applied 

in the calculation. 

- If an offer has been quoted that is lower than the last quoted trading price, the offer shall be 

applied in the calculation. 

- If either the closing bid or offer is used as the closing value, this price will be viewed as the last 

traded price in the calculation of the index on the following day, until a new official trade price is 

registered. 



The purpose of the NOREX Price Algorithm is to attain a price for index calculation, which is more precise 

for illiquid shares than the price of the last trade.



The calculation of BALTIX remains to be based on the official last quoted trading price for the security or 

the price at the close of the Index on the previous day.



3) Merger / take-over

In case of merger or takeover the share in question will be excluded from the index effective on the day the 

acquiring company controls at least 90% of the outstanding shares in the acquired company.



The term “control” is here defined as when either, (a) the acquiring company notifies the Exchanges of their 

control or receiving accepts of at least 90 per cent, (b) the transaction is registered in the Exchanges 

trading system or (c) the shares are registered with the CSDs.



For the calculation of BALTIX - if a company’s shares are at least 90 per cent owned by one owner, the shares 

are to be excluded from the index calculation during the next quarterly review, if the Baltic Exchanges do not 

decide otherwise.



4) Valuation method for spin-offs

In addition to the currently used exclusion rule a new “valuation method” will be introduced for spin-off 

adjustments. The aim is to attain a value for the spun-off share or right so that exclusion can be avoided on 

the ex-date. The value of the share/right can be calculated with the following three methods:

- When the share/right is listed on another exchange.

- When the company informs the public about the value.

- The median value of valuations from members (minimum 5 valuations).



If none of the above-mentioned methods is applicable the Exchanges have the possibility to exclude the 

share/right for the ex-date or until an appropriate price are available.



For more information please visit our webpage  <a href='http://www.omxgroup.com/riga.' target='_blank'>http://www.omxgroup.com/riga.</a>





For more information, please contact:

Inese Purgaile, Corporate Communications Specialist  

OMX Exchanges/ Riga Stock Exchange +371 7212431



Diana Sokolova, Marketing and Communications Manager

OMX Exchanges/ Vilnius Stock Exchange +370 5 272 13 71

						

Tex Vertmann, Communications Manager 

OMX Exchanges/ Tallinn Stock Exchange +372 640 8862