Paul: Welcome to Index Ideas from FTSE Russell. I'm Paul Amery, your podcast host. In this podcast we look into how indices are built and why. We explore index ideas that can help you address real-world investment challenges. As a reminder to listeners, you can't invest in an index. So the concepts that we discuss during the podcast are not investment advice. Any reference to potential investment strategies is intended for informational and educational purposes only.
Paul: In the last episode of the podcast, we looked at how FTSE Russell indexes the world's equity markets. In this episode, we zoom in and we look at Vietnam, which FTSE is currently reclassifying from a frontier market to an emerging market. To discuss why this is occurring and what it means, I'm joined by Wanming Du, who is director of index policy in the Asia Pacific region for FTSE Russell. Wanming, welcome to Index ideas.
Wanming: Thank you. Hi, Paul.
Paul: Wanming, what does FTSE Russell's policy team do?
Wanming: Our job is really to set, maintain and evolve the rules that govern FTSE Russell indices. And we anchor everything around three key principles: transparency, replicability and investability. In other words, we want people to be able to understand what we do, how our indices are constructed, to be able to replicate them in practice and trust that these are the investable part of the market.
Paul: What is your role as a director of index policy in the Asia Pacific region?
Wanming: So I lead our policy work across the APAC region. What it means is I spend a lot of time really tracking the market developments, speaking with regulators and clients, making sure our global methodologies are applied in ways that make sense for the local market practice. It's really about bridging the global standards for the regional realities.
Paul: And how do you interact with FTSE Russell's policy teams in other parts of the world?
Wanming: So I think the best way to describe it is we operate as a one global policy team with regional specialisation. So I work very closely with our colleagues in Europe and the Americas to make sure our methodologies are applied consistently around the world, but also feed in the APAC insights into the global decision-making as well.
Paul: What is the FTSE Equity Country classification process and how does the policy team support it?
Wanming: So the country classification process is really our framework for determining whether a market is developed, advanced emerging, secondary emerging or frontier. The policy team supports this by doing the underlying analysis, engaging with the market, reviewing accessibility criteria and putting together evidence that leads to the final market reclassification decision.
Paul: Let's turn to Vietnam. What decision have we recently taken about Vietnam?
Wanming: So we announced that in October 2025, Vietnam will be promoted from frontier to secondary emerging market status, with the change scheduled for September 2026, implementation subject to an interim review in March 2026. This decision reflects the significant progress that Vietnam has made on market accessibility.
Paul: Why did we take that decision last autumn and not implement it immediately? Why did we say that we're going to implement it a year later, subject to an interim review this month, in March 2026? Why the delay?
Wanming: So we didn't implement Vietnam's inclusion immediately because market reclassification normally requires 6 to 12 months’ notice. So setting the September 2026 is entirely the standard practice. Now, the interim review in March is really focusing on assessing whether an optional global broker model can be in place to help index trackers to replicate the market more efficiently.
Paul: Okay, and what does this change, this upcoming change in September 2026 mean in practice? Which important flagship FTSE Russell indices will Vietnam be joining as a result of this classification change?
Wanming: Once promoted, Vietnam will become eligible for the FTSE Global Equity Index Series, including the major benchmarks such as the FTSE All-World, FTSE Global All Cap and the FTSE Emerging Market Index.
Paul: Right. So these are very widely followed indices around the world by equity investors, either as benchmarks or as the underlying for tracker products like ETFs.
Wanming: Yes.
Paul: I noticed looking back at our documents that are on the FTSE Russell website that Vietnam had been on the watch list for reclassification from frontier to secondary emerging market for eight years, starting in 2018. That's quite a long time. What did the country need to do during that period to achieve the reclassification, and how did it do it?
Wanming: So yeah, you're right. We put Vietnam on the watch list for potential promotion since 2018. Now, in the last two years, I think Vietnam made significant progress towards meeting the requirements. So Vietnam met the last two criteria for secondary emerging market status by introducing the non-prefunding model and then a failed trade management process. Additionally, the account opening process—i.e. as a foreign investor, you need to open an account—that process has been simplified. So that makes a huge difference in terms of the accessibility criteria.
Paul: And which regulatory and government bodies did you work with in Vietnam as part of this reclassification process? What kinds of interactions did you have?
Wanming: So we worked very closely with the regulator, the State Securities Commission. The stock exchanges and then also the Depository and Clearing House VSDC. We also engage with organisations such as the World Bank and SIFMA. On top of that, we regularly check in with both the onshore and offshore market participants, such as the buy side, the custodians and then also the banks as well.
Paul: As part of the FTSE Equity country classification process there's an underlying quality of markets matrix, which shows which levels of market accessibility individual markets have passed. Why is this topic of market infrastructure so important in this quality of markets assessment?
Wanming: Because a robust markets infrastructure is fundamental to investors’ confidence. Ultimately, I think [it] is to market's true investability as well. So efficient trading, for example, settlement mechanism, a resilient trading system, a transparent regulatory framework, and also even just a simple, straightforward account opening process all play a very important role in that. So they directly really influence in terms of how investors manage operational and also counterparty risk. So they determine how easily investors can enter and exit a market. So I would say that even when a market has strong economic fundamentals, without a reliable market infrastructure, it cannot be considered genuinely accessible or investable.
Paul: Thank you for explaining that, Wanming. One of the things we do as an index provider and other index providers around the world do the same, is that we adjust companies’ equity share totals for what we call free float. How do we do that in Asian emerging markets and why is this an important topic?
Wanming: Yeah. So free float is actually a very important topic when it comes to indexing. So free float is basically the shares that an investor can actually trade. In the calculation of free float for an index constituent, for example, we take out the government holdings, for example, insider holdings strategic holdings that they typically do not move frequently. So in many Asian emerging markets, for example, also the foreign ownership restriction means that the real investable portion can be much smaller when you take that into account. So I think the free float concept is really important. It matters a lot from an index accuracy and investability as well. It reflects that true investable size of a company and of a market.
Paul: And how do we measure that in practice? Does that involve interacting with each individual company on a regular basis or in real time? What's the technology underlying that?
Wanming: So we do a periodic check on the free float of the company. We typically do it on a quarterly cadence. Now, of course, when a corporate action or event happens, we review the company floats as well. And the way we do it is we go through, we have a data source coming from O&P1, and that's really our kind of foundation of feeding into our free float calculation.
Paul: How do we interact with our external advisory committees and what is the role of those committees?
Wanming: So the external advisory committee really plays an important role in our governance process. So typically, we have representation from different industries. So from the asset owners, asset managers, they bring in the market insight and then combining the analysis that we do, all these discussions will help shape the recommendations that ultimately go into our formal governance process for decision-making.
Paul: But who takes the decisions in the end? Is it FTSE Russell? Do the external committees have a role in decision-making? What's the chain of command there?
Wanming: Yeah, I think it's very important to stress that the final decisions are actually taken by FTSE Russell’s Index Governance board. Now they consider feedback from the external committees and also recommendations from the policy team.
Paul: And which other markets—we talked about Vietnam during this podcast episode—but which other markets in Asia Pacific are you currently focusing on in your role as policy director? Are there any other ones that are top of mind for you at the moment?
Wanming: So beyond Vietnam, I wanted to mention a couple of other markets. So in India, for example, we are monitoring the developments around the introduction of a closing auction and the effort of simplifying the account opening process for foreign investors. In China, we continue to follow the country's ongoing initiative to further opening up its capital market. In South Korea, regulatory developments around short selling are of particular interest. And in Indonesia, following the recent capital markets reform, targeting to improve the data transparency and integrity of the market, we are closely watching how this change may affect our index treatment.
Paul: Wanming, thank you very much for taking the time to shine a light on this important, but probably not very well understood area of work at FTSE Russell. It's been a pleasure to have you on the podcast.
Paul: And that's it for this episode. If you've enjoyed the conversation, then please follow Index Ideas and give us a positive rating or review on your podcast app of choice. If you'd like to get in touch with Index Ideas, you can do that via the email address
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