Nasdaq rules undergo major overhaul! The proposal for large companies to "enter the market quickly within 15 days" has been approved, with new regulations effective from May 1.

Ask AI · Why is Nasdaq rushing to shorten the time for large companies to enter the market under new rules?

Nasdaq announced a comprehensive revision of the Nasdaq 100 Index’s entry requirements for the flagship equity index. The key measure is the introduction of a “fast track” mechanism that significantly cuts the waiting time for large newly listed companies to be added to the index. The new rules will take effect on May 1, but their actual impact on index constituents is expected to be visible only in June.

According to a Reuters report, under the new rules, Nasdaq will assess a company’s market-cap ranking on the seventh trading day after its IPO. If it meets the criteria, it can be added to the Nasdaq 100 Index as early as the 15th trading day. Previously, newly listed companies often had to wait as long as a year or even longer before they became eligible for inclusion review.

This change matters a great deal for the market. Being added to the Nasdaq 100 Index means the company can directly tap the capital of many institutional investors that track the index, which helps broaden the company’s shareholder base and improve stock liquidity.

High-value unicorn companies such as SpaceX are preparing to go public. This rule revision is seen as the exchange’s proactive move to get ahead of a potential wave of IPOs.

“Fast Track Entry”: Assessment completed in 15 days

The specific process for the new fast track entry mechanism is as follows: On the seventh trading day after a stock begins trading, Nasdaq will rank it by market capitalization and assess whether it can land among the top 40 constituent stocks in the index. If the company meets all entry criteria, it will be formally added to the Nasdaq 100 Index after the 15th trading day.

By comparison, under the current rules, constituent-stock ranking reviews are conducted only once per year. Newly listed companies must demonstrate that they can reliably absorb large buy orders from institutional investors, and the entire process can take up to more than a year.

Reuters reported earlier this month that SpaceX is actively seeking to be included in major benchmark indexes such as the Nasdaq 100 as soon as possible after listing.

In addition, other index operators, including FTSE Russell and the NYSE 100, are also racing to roll out similar access-rule reforms to address the challenges posed by highly high-profile companies such as SpaceX, Anthropic, and OpenAI that are set to enter the capital markets.

The rule changes include multiple supporting adjustments

In addition to the fast track entry provisions, the new rules also include a number of systemic revisions:

Updated method for calculating market capitalization. The new approach will combine already listed shares and unlisted shares across different share classes when calculating market capitalization, to more comprehensively evaluate a company’s market value and determine its eligibility for inclusion.

Elimination of the minimum public float requirement. The current requirement that companies have at least 10% of shares in circulation will be removed. However, companies with a lower float will receive a correspondingly reduced weight in the index to balance the impact.

Establishing a weight-based floor exit mechanism. If a constituent stock’s weight in the index remains below 10 basis points for two consecutive months, it will be removed from the index, replaced by the next largest-market-cap company that meets the criteria.

Quarterly updates to total share capital data. The frequency at which companies update their total outstanding shares will change from the current irregular updates to regular quarterly disclosures.

Current members of the Nasdaq 100 Index include global tech leaders such as Nvidia, Apple, and Amazon. Last year, Walmart moved its listing venue to Nasdaq, setting the record for the largest exchange backdoor transfer in history.

The number of listed companies continues to shrink

The backdrop for this reform is a long-term decline in the attractiveness of the U.S. public markets. According to a white paper Nasdaq published last year, since 2000, the number of companies listed on U.S. exchanges has fallen by more than one-third.

Heavy disclosure requirements and high listing compliance costs have led more and more large startups to choose to delay going public or remain private for the long term. High-valuation firms such as Stripe and Databricks still have not gone public.

Cameron Lilja, head of Nasdaq Global Index Solutions, said that keeping a company that has already reached a considerable scale—large enough to occupy a meaningful weight in an index—“does not truly reflect the real composition of the market.”

He also noted that as corporate ownership structures become increasingly diverse, more and more companies have already grown into genuine mega-cap enterprises before they even list.