IT wins own stock listing

FTSE International, the regulatory outfit of the UK Stock Exchange, has finally awarded technology firms a separate listing after months of confusion over defining the nature of IT companies.

In a meeting which took place on 1 December, the FTSE Actuaries Industry Classification Committee agreed to create the sub-sector as part of the Support Services category.

Since September, the committee has failed several times to reach an agreement over the classification (PC Dealer, 3 September).

Problems have arisen over the fact that dissimilar organisations such as Reuters, which has a high technology content, could be grouped with a software distribution company under the same index.

Alastair Herbert, director of marketing at FTSE International, said: 'It has been agreed to create a sub-sector restricted to software and support.'

Herbert added: 'We could not get into a serious consensus on definitions of IT companies because it is too broad.'

Previously, there had been calls from both the Computer Services & Software Association (CSSA) and investment bank Granville to provide a completely separate listing for IT companies.

Herbert was hopeful of setting up a fully separate IT sector by next year, but said: 'For a new classification, a proposed sector must have over one per cent of the overall market share. Technology has a 0.83 per cent stake at the moment.'

Richard Donner, director of Granville, said: 'It is not certain a separate classification will go ahead, so the IT industry has to make it happen by increasing growth.'

Wayne Channon, chairman of Ilion, said the sub-section would allow stocks to appreciate under the share price because of the increased exposure.

He added: 'The sub-sector will allow the difference in segments to be reflected and allow investors to focus on companies which specialise in one sector.'