FTSE Russell Nationality Alignment Consultation: Next Steps
03 March 2017
FTSE Russell would like to thank all those who responded to the Nationality Alignment Consultation.
FTSE Russell has reviewed the responses to the consultation and subsequently discussed these with theFTSE Russell Regional Equity Advisory Committees and the FTSE Nationality Committee.
As a result of these discussions, FTSE Russell has determined that there was insufficient support at thistime for the implementation of a single nationality rule that could be used in both FTSE and Russell
indexes. There was however support for the introduction of an enhanced rule for determining whether
companies should be assigned a nationality of China.
In the light of this, FTSE Russell intends to proceed as follows:

There will be no change to the nationality rule used to determine eligibility for the Russell US
indexes at the June 2017 reconstitution.



There will be no change to the nationality rule used in the FTSE Global Equity Index Series for theSeptember 2017 semi-annual review.

For the avoidance of doubt there will be no change to the nationality rule used in the FTSE UKIndex Series.

The nationality rule used to determine whether a stock has Chinese nationality will beimplemented, as set out in the consultation, at the September 2017 reviews. This rule specified
that A-shares, B-shares, H-shares, P-chips, S-chips, Red-chips and N-shares - and no othersecurities - would be assigned Chinese nationality in the FTSE Russell indexes. A summary of thedefinitions of the various share types can be found here.

As a result of the above, N-shares and S-chips - including Alibaba and Baidu - will be consideredfor inclusion in FTSE China indexes as part of the FTSE Global Equity Index Series (GEIS). Thisincludes customized indexes and other indexes that are derived from FTSE GEIS or utilize it as aselection universe. Due to the impact of including these additional constituents, FTSE Russell willconsult with users and other stakeholders with respect to the optimal timing and phasing of theirinclusion. Please note that FTSE GEIS currently excludes China A shares, although A-shares areincluded as part of the FTSE Global China A Inclusion Indexes.

N-shares and S-Chips will not be eligible for inclusion in the FTSE China 50 Index as only China
share classes that are listed on the Stock Exchange of Hong Kong (HKEX) are included.

The FTSE China A50 Index only includes China A-shares and is not impacted by the nationalitychanges.

The FTSE MPF Index Series will not be impacted by the nationality changes.

For other FTSE China indexes which have their own eligibility criteria or are used as exchange
traded products, such the FTSE Greater China Index, FTSE Russell will undertake furtherconsultations with stakeholders with respect to the potential inclusion of N-shares and S-chips inChina.

For clarity, and despite the precedent set by the inclusion of N-shares in certain China indexes,
Depositary Receipts including ADRs without a listed underlying share currently remain ineligiblefor the FTSE Global Equity Index Series. i.e. The N-share designation will supersede the ADR withan underlying share requirement, for the purposes of index eligibility.
FTSE Russell will be consulting further on the eligibility criteria, including nationality criteria, thatwill be used in the Russell Global Index (ex-US) from September 2017. Please refer to theRussell Global Index reconstitution disseminated concurrently with this announcement foradditional information. A further notice with respect to the future constitution of the Russell
Global Index (ex-US) will be published on or before 31 May 2017.

Chinese_S_Chips_and_N_Shares.xlsx

For further information please contact FTSE Russell Client Services at info@ftserussell.com or call:Australia
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