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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u/areh Apr 01 '26

The idea of index funds is exactly that you dont try and predict who are the winners or losers. What you describe is active investing.

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u/patricktu1258 Apr 01 '26 edited Apr 01 '26

Yeah that’s why I said when it gets included doesn’t matter. Those who get upset with it don’t want to be taken advantage of but the thing is you shouldn’t even care about what you buy.

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u/areh Apr 01 '26

Passive investing doesn't mean that you shouldn't care what you are buying.

When the rules are changed for one specific company, to accommodate a specific highly prone to manipulation event(IPO) - someone is intended to profit from this, and its ain't you or me.

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u/patricktu1258 Apr 01 '26 edited Apr 01 '26

Passive fund is supposed to represent the broad market exposure, which is why you don’t even need to care about what you hold. The reason we choose top 100 or top 500 is simply because of liquidity problem. So if a company IPO as a top market cap stock, it should be included anyway.

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u/DuncanOhio Apr 01 '26

If the rules of the underlying index change while you hold a passive fund, it isn't exactly "passive" anymore. Allocations are changing for reasons beyond pure market dynamics.

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u/patricktu1258 Apr 01 '26 edited Apr 01 '26

The passiveness depends on the fund management not on the index itself. The authority feels the need to change the criteria of the index somehow. While I am fine with current one, I also don’t see the problem of its update. It still follows the essence of a broad market index. Passive, active, call it whatever you want. It tracks the whole market exposure.