What is the effect of a low floating share ratio?

With fewer shares being routinely traded in the market, the share price is thought to become more sensitive to shifts in supply and demand, potentially resulting in sharper price swings. The floating share ratio is also one of the factors involved in the Tokyo Stock Exchange's listing-maintenance criteria for its market segments.

Where can I check a company's floating share ratio?

It can be found in each company's securities report and in shareholder information published by the Tokyo Stock Exchange for its listed companies. It is calculated by excluding shares held by major shareholders, executives, treasury stock, and similar fixed holdings from shares outstanding.

What Are Floating Shares?

Floating shares are the portion of a company's shares outstanding that can be routinely traded in the market, excluding fixed holdings such as those of major shareholders, executives, and treasury stock.

Fixed shares vs. floating shares

Shares outstanding that are held long term and rarely traded in the market — such as those held by major shareholders, executives, treasury stock, and cross-held strategic shareholdings — are referred to as "fixed shares," while the remainder, which circulates more freely in the market, is called "floating shares." A higher floating share ratio is generally associated with greater market liquidity, or ease of trading.

What to keep in mind

Stocks with a low floating share ratio are sometimes noted for having a tendency to move sharply even on relatively small trading volumes. The Tokyo Stock Exchange's listing maintenance criteria for its market segments (Prime, Standard, and Growth) include floating share ratio requirements, making it one of the factors relevant to market-segment classification.

This article is provided for general informational purposes only and does not recommend or solicit the purchase or sale of any specific investment method or security. Final investment decisions are your own responsibility.

Frequently Asked Questions

What is the effect of a low floating share ratio?: With fewer shares being routinely traded in the market, the share price is thought to become more sensitive to shifts in supply and demand, potentially resulting in sharper price swings. The floating share ratio is also one of the factors involved in the Tokyo Stock Exchange's listing-maintenance criteria for its market segments.
Where can I check a company's floating share ratio?: It can be found in each company's securities report and in shareholder information published by the Tokyo Stock Exchange for its listed companies. It is calculated by excluding shares held by major shareholders, executives, treasury stock, and similar fixed holdings from shares outstanding.

Related terms

Major Shareholder