# Free-Float Factor Calculation

`D03-F06-A03` · Index and Benchmark Engineering → Governance and Maintenance · archetype `record-transform` · difficulty 3/5 · verification **verified**

Full page: https://docs.thefintechbuilder.com/index-and-benchmark-engineering/governance-and-maintenance/free-float-factor-calculation/
Agent skill: `npx skills add IslamBaraka90/Fintech-Algorithms-Library` — https://docs.thefintechbuilder.com/guides/agent-skill/

## Install and import

```bash
npm install fintech-algorithms
```

```ts
import { calculate } from "fintech-algorithms/index-and-benchmark-engineering/governance-and-maintenance/free-float-factor-calculation";
```

## Signature

```ts
calculate(data)
```

Derives the free-float factor by removing strategic, government, insider and cross-holdings, then rounds it to a band. Rounding is deliberate: unrounded factors would force a weight change every time a holding moved a fraction of a percent.

## Parameters

| Name | Type | Required | Notes |
| --- | --- | --- | --- |
| `data` | `{ records: Record[]; roundingStep: number }` | yes | `roundingStep` is the band width — 5% is common. It trades a little precision for a great deal less turnover. |

## Returns

`{ results, roundingStep }`

The raw and rounded factor per constituent, with the excluded holdings that produced it.

## Errors

- When roundingStep is not between 0 and 1 — throws

## Complexity

Time `O(n × holdings)`, space `O(n)`.

## Worked example

This is the worked example published in the article, replayed by the test suite on every run. The output cannot drift.

### Input

`data`:

```json
{
  "records": [
    {
      "id": "A",
      "issuedShares": 1000000,
      "strategicShares": 280000
    },
    {
      "id": "B",
      "issuedShares": 2000000,
      "strategicShares": 900000
    },
    {
      "id": "C",
      "issuedShares": 500000,
      "strategicShares": 25000
    }
  ],
  "roundingStep": 0.05
}
```

### Call

```ts
calculate(data)
```

### Returns

object with 2 fields: results, roundingStep

```json
{
  "results": [
    {
      "id": "A",
      "rawFreeFloat": 0.72,
      "freeFloatFactor": 0.75
    },
    {
      "id": "B",
      "rawFreeFloat": 0.55,
      "freeFloatFactor": 0.55
    },
    {
      "id": "C",
      "rawFreeFloat": 0.95,
      "freeFloatFactor": 0.95
    }
  ],
  "roundingStep": 0.05
}
```

## Verification and provenance

Tier: **verified** (via input-expected).

The worked example below is the figure published in this algorithm's article, replayed and asserted by the test suite on every build. The arithmetic cannot drift without the build failing.

Both tiers guarantee the signature. Full explanation: https://docs.thefintechbuilder.com/guides/verification/

Generated from the docs.json payload shipped inside fintech-algorithms@0.13.1.
The signature and parameter list are checked against the compiled implementation at build time,
so a description that contradicts the code fails the build rather than reaching this file.

## Links

- Article (how it works, step by step): https://thefintechbuilder.com/index-and-benchmark-engineering/governance-and-maintenance/free-float-factor-calculation/
- Implementation source: https://github.com/IslamBaraka90/Fintech-Algorithms-Library/blob/main/src/index-and-benchmark-engineering/governance-and-maintenance/free-float-factor-calculation/impl.ts
- Package on npm: https://www.npmjs.com/package/fintech-algorithms
- Domain index for agents: https://docs.thefintechbuilder.com/index-and-benchmark-engineering/llms.txt