Nasdaq Adopts New "Fast Entry" Rule for the Nasdaq-100 Index
Many market watchers are looking forward this year to several potential large new IPOs by major technology companies, such as Anthropic, OpenAI and SpaceX. In March 2026, Nasdaq, the sponsor of the Nasdaq-100 Index (the "NDX"),1 adopted a new "fast entry" rule that is expected to enable the early inclusion of these types of companies into the index. The rule change is designed to ensure that NDX investors need not wait a significant amount of time before gaining exposure to these stocks after they effect an IPO and list on the Nasdaq.
The rule change is expected to impact the exposure of structured products and investment funds that track the NDX (and proprietary indices that are based in part on the NDX).2
Nasdaq's updated methodology, which will be effective on May 1, 2026, may be accessed here.
Current Schedule for Inclusion
Prior to these changes, under the existing NDX index methodology, new constituents are typically added to the NDX at the time of the annual reconstitution, which occurs in December of each year, if they have been publicly traded for a "seasoning period" of at least three months. This feature of the rules means that there could be a significant delay before a major company that has recently completed an IPO and listed on Nasdaq is added to the NDX, even if investors want or expect exposure to that company in order to reflect the then-current characteristics of Nasdaq activity. If one or more of these anticipated IPOs occurs, and the issuer lists on Nasdaq, it could take some time before the company is included in the NDX, even if its market capitalization and trading volume would exceed that of many current NDX constituents.
New Fast Entry Rule
To address these types of situations, Nasdaq has adopted a "fast entry" rule to enable newly-listed Nasdaq companies to potentially enter the NDX. Under the new rule, a newly-listed Nasdaq company will be evaluated for index inclusion. If its market capitalization ranks within the top 40 current constituents in the NDX (approximately $100 billion as of year end), the company would be announced as a "fast entry” addition to the index, subject to five trading days' prior notice, and will then be added after 15 trading days.3 The relevant company will be exempt from the NDX's currently-existing seasoning requirements (typically, more than three months of trading) and liquidity requirements (typically, a three-month daily traded value of at least US$5 million). This "fast entry" rule will also apply to any company that changes its listing to Nasdaq from an ineligible exchange.
The inclusion of the new company will not require the removal of another security from the NDX. Instead, the number of constituents of the NDX will be increased until the next annual reconstitution. (As a result, the Nasdaq 100 can consist of more than 100 members.)
Additional Methodology Revisions
Nasdaq has also adopted a few additional changes to the NDX methodology to better accommodate the inclusion of fast entry eligible securities. These revisions relate to, among other things:
a. To evaluate a company's entire market capitalization, including both listed and unlisted shares, for purposes of index eligibility and ranking.
b. Revisions to the NDX rules relating to including and weighting securities with a low free float. Previously securities with less than 10% free float were excluded; the new rules do not include a minimum free float requirement, but would reduce the weighting of securities with a free float of less than 20% by setting their market capitalization to three times its free float value, with a cap at 100%).
c. Adjustments to its rules relating to removing securities with smaller market capitalization from the NDX so that a fast entry inclusion of one security will not require the removal of another security and may, therefore, increase the constituent count to more than 100 .
The details relating to these proposals may be found in the linked page set forth above.
Timetable
The new rules will become effective on May 1, 2026. This timing means that it is possible that the initial impact of the new rules could be reflected as early as Nasdaq's scheduled June 2026 reconstitution, of course, depending upon the timing of any new and large IPOs.
The NDX is an equity index that includes 100 of the largest U.S. and non-U.S. non-financial companies listed on The Nasdaq Stock Market, based on market capitalization. The NDX is the underlying index for a number of major ETFs, and a significant amount of structured notes and structured CDs, issued both in and outside of the U.S., are linked to the NDX or those ETFs.
In addition, pricing supplements, FWPs, underlier supplements and other disclosures that describe the NDX index methodology are likely to require some revisions to reflect these rule updates.
Nasdaq may extend this timeline in cases where "fast entry" inclusion could interfere with a scheduled rebalance or reconstitution.
