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by martinclayton 22 days ago
What's the rationale offered by NASDAQ for their new "15-days and you're in the index" rule for these massive IPOs?

Seems equivalent to removing road safety rules for the least-tested, most-powerful new vehicles only.

4 comments

They want the index to be representative of the top stocks listed on the Nasdaq, even if they are brand new. The Nasdaq 100 in particular is a marketing tool for the stock exchange, it's not a particularly principled index.
It seems like the index funds’ problem to solve.

They should just have their own criteria for inclusion in the fund.

Yeah, indeed. See (march) https://www.reuters.com/business/new-nasdaq-rules-include-fa...

Quote from Cameron Lilja, Nasdaq's global head of index solutions:

"It is not necessarily representative to have a company that's big and could have a sizable representation in the index to keep them out for that long," Lilja said in an interview. "We're seeing share and corporate structures change - and companies that are staying private considerably longer are thus growing to be truly mega-cap companies before they even come to the public markets."

There's been fewer IPOs recently so Nasdaq and competitors are all racing to woo the few big ones to list with them.

How much will NASDAQ make for getting SpaceX on them? Surely it is not small sum?
Tens and hundreds of thousands of dollars for listing. But they make money from the trading and associated services they facilitate, hence the desire to have the largest most liquid stocks.

https://resourcehub.bakermckenzie.com/en/resources/cross-bor...

https://www.investopedia.com/articles/investing/050515/how-n...

> What's the rationale offered by NASDAQ for their new "15-days and you're in the index" rule for these massive IPOs?

This actually makes sense to me. The NASDAQ 100 is—brand wise—geared towards the largest technology companies. It isn’t trying to pick good investments. It’s trying to represent that market. All of these AI companies fit that bill.

I’m more sceptical about S&P suspending its float and profitability requirements. But despite financial influencers on YouTube banging this drum for views, S&P hasn’t actually decided that yet.

The rational was: SpaceX will list with you, if you change that rule for us.
I suppose you could make an argument that these enormously large IPOs are themselves a new phenomenon and need to be accounted for.