The sickle swings at index fund investors: S&P Dow Jones says SpaceX is eligible for rapid inclusion in certain indices

Mars Finance News, on June 10, the proverbial scythe was swung at index fund investors and Americans’ retirement savings accounts. S&P Dow Jones Indices has just indicated that SpaceX is eligible to be quickly included in part of the indices. However, compared with other index providers, S&P has already become more cautious. In addition to S&P Dow Jones Indices, other independent index providers have also adjusted their rules for giant IPOs such as SpaceX, so that they can be added to their indices more quickly.

FTSE Russell has recently implemented a new fast-entry mechanism that allows qualifying ultra-large-cap companies (such as SpaceX) to be included in U.S. equity indices like Russell 1000/2000/3000 and the FTSE Global Equity Index Series just 5 trading days after listing, mainly based on free-float market capitalization thresholds. In addition, the Nasdaq (especially the Nasdaq 100) has also introduced a new “fast entry” rule. Giant IPOs such as SpaceX can be included about 15 trading days after listing, which will force ETFs and funds tracking the Nasdaq 100 to buy large amounts of shares in the short term.

S&P Dow Jones Indices has recently made minor rule adjustments to some of its broad market indices, mainly relaxing requirements for the public float percentage. These indices include the S&P Total Market Index (S&P Total Market Index) and the Dow Jones U.S. Total Stock Market Index (Dow Jones U.S. Total Stock Market Index). After the adjustments, newly listed companies like SpaceX, which have a lower share float ratio but a large market capitalization, can be included in a shorter period after listing without having to meet the stricter S&P 500 requirements such as the 12-month listing period and profitability thresholds.

Fortunately, S&P will maintain its existing eligibility requirements for major benchmark indices such as the S&P 500, and it has rejected proposals to accelerate the quick inclusion of giant companies like SpaceX into this benchmark index after listing. This will not shorten the current 12-month “seasoning period” set for new listings, and it will not waive existing requirements on profitability and public float percentage based on company size. This means SpaceX will be eligible for inclusion in the S&P 500 only at least one year after listing.