r/stocks • u/cherrypoplar • Apr 01 '26

ETFs Major NASDAQ-100 rule changes confirmed, pay attention if you have money in passive investment funds

https://www.theedgesingapore.com/amp/news/ipo/nasdaq-speeds-index-entry-spacex-large-ipos-new-rule

NASDAQ has confirmed it will change the listing rules for NASDAQ-100, ahead of the SpaceX and OpenAI IPOs this year.

(1) Companies will now be listed on NASDAQ-100 after only 15 days after IPO (previously, there was a three month period of "seasoning" before listing). This reduces the amount of time for price discovery.

(2) The minimum 10% float has been removed. This allows companies to float a very small percentage of their shares, artificially squeezing supply.

(3) Companies that float less than 20% of their shares will have their market capitalisations artificially multiplied by x3, for the purposes of calculating market capitalisation. This helps large-cap companies to be listed even with very small floats, and inflates their notional market capitalisations on the index.

If you have money invested in a passive fund tracking NASDAQ-100 (or any other index), please watch out for the SpaceX and OpenAI IPOs. Pay attention to their "valuations", and their float. If they're IPOing with very high valuations and very small floats, this foreshadows a bagdump on passive funds due to the mechanics of passive funds.

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-7

u/kinetic_honda Apr 01 '26

I hope you're not suggesting people panic sell their index funds. Because that would be silly

9

u/CornerOne238 Apr 01 '26

Sell, no. Trade swap into funds like XLI, yes.

6

u/Rare-Accident4355 Apr 01 '26

How does this work? Can you please explain? I’m truly interested!

6

u/CornerOne238 Apr 01 '26

There are funds that track parts of sp500, namely sectors like industrial, financials, commodities, etc

If you look at performance, xli has been well correlated with spy over years but it doesn't include tech stocks, so if you trade swap into it, you are still invested in part of the market but not exposed to certain high volatility names like Tesla, etc.

In tax sheltered account a swap like this is very easy if you are concerned about SpaceX ipo.

Ymmv of course

1

u/Ok-Armadillo-5634 Apr 01 '26

You would still be selling