Free Float is the proportion of shares available for public trading, excluding strategic holdings, directors, and locked-up shares.
What's Excluded from Free Float
| Holding Type | Typical Threshold |
|---|---|
| Strategic stakes | >5% (or >3% for some indices) |
| Director holdings | All |
| Government ownership | All |
| Treasury shares | All (company-held) |
| Lock-up restrictions | All restricted shares |
| Employee benefit trusts | Usually excluded |
Minimum Free Float Requirements
| Listing Type | Minimum Free Float | Notes |
|---|---|---|
| Premium Listing | 25% | EU requirement |
| Standard Listing | 25% | EU requirement |
| AIM | None | No minimum |
FCA may grant waivers in exceptional circumstances.
Free Float and Index Inclusion
FTSE indices use free float for calculations:
| Factor | Impact |
|---|---|
| Index weighting | Based on free float market cap |
| Minimum requirement | Must meet threshold for inclusion |
| Rebalancing | Free float changes trigger adjustments |
Impact on Liquidity
| Free Float Level | Trading Characteristics |
|---|---|
| High (>50%) | Better liquidity, tighter spreads, lower volatility |
| Medium (25-50%) | Adequate for most institutional investors |
| Low (<25%) | Higher volatility, wider spreads, difficult for large positions |
Institutional investors require adequate free float to build meaningful positions without moving the market.
Disclosure Requirements
- Expected free float in admission documents (prospectus/AIM admission)
- Major shareholdings in annual reports (>3% thresholds)
- Index provider calculations (FTSE publishes free float %)
- RNS announcements when thresholds crossed