The Toronto Stock Exchange 300 composite index will be no more as of May 1.

The premier Canadian benchmark index is being replaced by the S&P/TSE Composite Index, which will no longer have to have 300 constituents.

The TSE said the changes are designed to better position Canadian investors and industries in global equity markets.

The revisions to the index represent the first major change to the TSE 300 since 1977. The changes come after extensive consultation by Standard and Poor’s and the TSE with the marketplace of index users in Canada.

Key among the changes announced is a set of new criteria for inclusion and maintenance of public companies in the index. There will no longer be a requirement for the index to have exactly 300 companies. Company size and liquidity will be the chief attributes determining index membership.

Under the new rules the number of stocks making up the index will vary over time. All stocks that qualify for inclusion during quarterly reviews will be automatically included in the index. There will be two basic standards by which companies will be evaluated — size and liquidity.

Size measurements will be based on minimum price and market capitalization. Liquidity measurements will be based on trading activity on the TSE.

In addition, S&P said that the Global Industry Classification Standard will be incorporated in the revised index. The current TSE 300 Composite Index uses an older classification system that divides stocks into 14 groups and is unique to the Canadian marketplace.

The GICS was developed by Standard & Poor’s and Morgan Stanley Capital International in response to the global financial community’s need for a single and consistent set of industry definitions. The new GICS-based indices will be introduced starting on March 22.

“The entire Canadian investment community has been very supportive of our efforts to bring Canada a better benchmark index,” said Richard Nesbitt, president TSE CDNX Market Services Inc. “As the leader in this field, the changes Standard & Poor’s is making will further elevate Canadian companies as investment opportunities for Canadian and international investors.”

Glenn Doody, director of Canadian Index Services for S&P, said, “The changes will address two main functions of a good benchmark — it must be investable and it must be representative of a fund manager’s portfolio. Given that many fund managers limit their investments to companies in the top two-thirds of the index, these changes ensure that the index will serve Canadian investors well.”