Nasdaq plans to expedite the process of including large IPOs in its indices.
PANews reported on March 30 that Nasdaq will introduce a series of new rules, including expediting the inclusion of newly listed large companies in the Nasdaq 100 index. This move aims to reduce the waiting time for companies to enter this flagship index. With high-valuation tech companies like SpaceX and OpenAI preparing for IPOs, the exchange operator is trying to accelerate the IPO process. Lillia, head of Nasdaq's global index solutions, stated that Nasdaq is considering rule adjustments to ensure that newly listed large companies and companies transferring to other exchanges do not have to endure a wait of up to a year or more to be included in the Nasdaq 100 index. Nasdaq stated that the new rules, including the "fast-track inclusion" mechanism, will take effect on May 1, but most adjustments are expected to impact the index components only in June.
Rapid inclusion:
Under the "fast-track inclusion" rule, Nasdaq will assess a new stock's eligibility for inclusion based on its market capitalization ranking on the seventh trading day after its listing, determining whether it can enter the top 40 of the index's constituent stocks. If all conditions are met, the company will be fast-tracked into the Nasdaq 100 Index after the 15th trading day following its listing.
Other adjustments:
Other rule adjustments to the Nasdaq 100 index include:
1. A new market capitalization calculation method for assessing eligibility, which combines listed shares with unlisted shares in different categories.
2. The requirement that companies must have at least 10% of their shares in circulation is removed.
3. Companies with a lower percentage of shares in circulation will receive a lower weighting in the index.
4. If a company's weight in the index falls below 10 basis points for two consecutive months, it will be removed and replaced by the next largest company that meets the criteria.
5. The company's total share capital data will be updated quarterly, replacing the current irregular update mechanism.
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