Canadian Mergers and Acquisitions
consultation - September 2014

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Agenda Background Proposal
 Questions
 Appendix
 Appendix I: Current Methodology
 Appendix II: Example to illustrate proposal impact
 Appendix III: A few metrics with the proposal©2014 MSCI Inc. All rights reserved.

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Background Currently, for Canadian M&As, once all regulatory approvals are received, MSCI
generally waits for the actual delisting notice of the target company provided bythe stock exchange to implement the deletions of target securities from theindexes.
 As a result, as many delisting notices arrive late, many M&As treatment in
Canada are announced as Intradays, giving less than 2 days advance notice toMSCI Clients.
 Also, even if a completion date for the event is publicly available, MSCI does not
currently use it and hence, does not send an estimated completion date with an‘”Expected” status to MSCI Clients. The event status is changed from
“Undetermined” to “Confirmed” only after the actual delisting notice has beenreleased by the stock exchange.

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Proposal
MSCI proposes to send “expected” announcements for the deletion of target
companies based on the expected completion date (ECD) of the event as
announced in companies’ press releases. This would allow clients to better
anticipate the implementation of the event.
MSCI also proposes to estimate an expected deletion date using this ECD + 3
business days*. This expected deletion date from the MSCI indexes for thetarget company would be announced with an “Expected” status, until thedelisting date is announced by the Toronto Stock Exchange (TSX).
MSCI would still use the official delisting date from the TSX to send “Confirmed”
announcement and remove the target company from the MSCI indexes. Assuch, Intraday deletion announcements would not be reduced, or eliminated.
Please note that these proposals may or may not lead to any changes to the MSCIindexes.
* Based on past cases analysis, MSCI has determined that the expected deletion date was best approximated using
the ECD date + 3 business days.

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Proposal (continued)
1. Send “Expected” announcement: Using the expected deletion datecalculated from the ECD. Note that “Expected” announcements aregenerally sent 10 business days before the expected deletion date whenfeasible, due to companies’ announcement timing.
2. Monitor the event and wait for official delisting: Even if there is anexpected announcement with an effective date, MSCI will wait for theofficial delisting from TSX to send a “Confirmed” announcement in orderto delete securities as of the close of the last trading day. As a result, the“Expected” status may remain unchanged even after the effective date has
passed, which is an exception to the MSCI current announcement policy.
3. Send “Confirmed” announcement only after TSX announces delisting:Once MSCI receives the TSX Bulletin with the effective delisting date of thesecurity, MSCI will send a “Confirmed” announcement for the deletion ofthe security from the MSCI Indexes.

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Questions
 Should MSCI use the ECD of the event as announced by the company to delete
the target company from the MSCI indexes instead of waiting for the delisting
date, even if the potential outcome may be that deletion would occur a few
days prior to or after the delisting date?
For example:- MSCI would send an “Expected” announcement using the expected deletion date.
- MSCI would send a “Confirmed” announcement 2 days before the expected deletion date, not waiting for the delisting noticefrom the Stock Exchange.

As per the analysis of past cases conducted on 4 Standard Index Constituents, 1case would have been deleted at the same time as the TSX delisting date, 1 casewould have been deleted after and 2 cases deleted earlier.
 Should MSCI use the ECD (as provided by the company) instead of ECD + 3business days?
 As mentioned in slide 5, the “expected” status may remain unchanged evenafter the effective date has passed. Would this exception create any issue?
 More generally, should MSCI use a day other than the last trading day to delete
a security from the MSCI indexes?

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Appendix
I. Current Methodology
II. Example to illustrate proposal impact
III. A few metrics using the proposal©2014 MSCI Inc. All rights reserved.

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Appendix I: Current Methodology
MSCI Corporate Events Methodology:
Section 2.1 Treatment of M&As in the MSCI Universe
As a general principle, MSCI implements M&As as of the close of the last trading
day of the acquired entity or merging entities (last offer day for tender offers),
regardless of the status of the securities (index constituents or non-index
constituents) involved in the event. MSCI uses market prices for implementation,
unless stated otherwise.
For Canada M&As in particular, after having all regulatory approvals, MSCI
generally waits for the actual delisting provided by the stock exchanges toimplement the deletions of securities.

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Appendix II: Example to illustrate proposal impact
Cnooc Limited has announced it will acquire all of the outstanding shares of NEXEN(a Large Cap index constituent) for cash. For each share held, NEXEN shareholders
will receive USD 27.50 in cash.

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Appendix III: A few metrics using the proposal
Analysis conducted on 28 cases from January 2011 – March 2013 (4 Standard index
constituents and 24 Small Cap index constituents).

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May 2014

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