Nasdaq will accelerate the inclusion of post-IPO companies in the main index. This is what SpaceX wanted

Nasdaq will change the rules for inclusion of companies in the Nasdaq-100 index in order to speed up the access of major players that have recently entered the exchange, Reuters writes. Elon Musk's SpaceX, which is expected to hold an IPO in June and will be listed on Nasdaq, has been seeking just that. For issuers of this size, the time to get into the index will be reduced from three months to 15 days.

Recently listed companies whose market capitalization matches the level of the largest Nasdaq-100 participants will be able to apply for inclusion in the index after 15 days of trading, Nasdaq said in a statement. Now this period is at least three months, Bloomberg explains.

Under the "accelerated inclusion" rule, the exchange will evaluate new stocks for possible addition to the index as early as the seventh trading day. The size of the company must be sufficient to be included in the top 40 components of the index, according to the exchange's new methodology. At the same time, the addition of such a player will not necessarily mean someone's exclusion, so temporarily in the index may be more than a hundred issuers, the document says.

Now the index is revised only once a year, and the process of inclusion can take even more than a year: new public companies need to prove resistance to the influx of large bids from institutional investors, notes Reuters.

The Fast Entry feature will go into effect on Ma. 1, but most of the changes will not begin to affect the index's composition until June, Nasdaq said.

S&P Dow Jones, Nasdaq and FTSE Russell are now reviewing the rules as well, Bloomberg reports.

The changes come amid preparations for IPOs of highly valued technology companies such as Elon Musk's aerospace SpaceX and ChatGPT developer OpenAI, Reuters notes. As The Wall Street Journal's sources reported in February, SpaceX advisers have been in talks with major index providers including Nasdaq to get into key benchmarks faster. Cameron Lilja, head of the exchange's global index solutions division, confirmed to Reuters that rules are being changed to reduce expectations. This includes large companies switching from other exchanges, he said.

"It is not quite correct to keep out of the index a large company that can take a significant share in it," Lilja said. According to him, equity capital structure and corporate models are changing, and companies are staying private longer and reaching mega-capitalization by the time of IPO.

SpaceX is leaning toward listing its shares specifically on the Nasdaq exchange, sources told Reuters. A potential $1.75 trillion valuation could make it one of the largest companies in the Nasdaq-100. SpaceX could file in the coming days as it aims to go public by June to coincide with Musk's birthday and the convergence of Jupiter and Venus.

Two more tech offerings expected this year: AI startup Anthropic is rushing to launch an IPO as early as October in a race against its main competitor, OpenAI, Bloomberg sources claim. In February, neural network developer Claude closed a $30 billion investment round at a business valuation of $380 billion, while creator ChatGPT was valued at $730 billion before investment in its latest round.

The Nasdaq-100 index includes the world's largest publicly traded companies, including tech giants Nvidia, Apple and Amazon.

Getting into major benchmarks is extremely attractive for large players because it opens up access to capital from institutional investors, broadens the shareholder base and increases liquidity over time, Reuters writes.

- A new method of market capitalization calculation is introduced to determine the right to be included in the index. It implies taking into account both traded shares and illiquid securities of different classes.

- The minimum free float requirement of 10% is abolished.

- Companies with low free float will have a lower weight in the index.

- If a company's weight in the index is below ten basis points for two consecutive months, it will be eliminated and replaced by the next largest eligible company.

- Updates on the total number of shares outstanding will be made on a quarterly basis instead of the irregular practice now in place.

This article was AI-translated and verified by a human editor