Paving the way for SpaceX? FTSE Russell Suddenly Changes Rules: Large IPOs Can Be Added to Index in as Few as 5 Days

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FTSE Russell has announced revisions to its index inclusion rules, allowing large newly-listed companies to be included in its major indices as early as the fifth trading day. This comes just weeks ahead of SpaceX's anticipated record-setting IPO.

FTSE Russell officially announced this policy adjustment on Tuesday evening. According to the new rules, IPO companies with investable market capitalization exceeding the Russell Top 500 threshold will be eligible for "fast-track inclusion" after the fifth trading day, whereas previously such companies had to wait for the quarterly regular review to be included. Arne Noack, Head of Equities and Multi-Asset Indexes for the Americas at FTSE Russell, stated in a release, "Introducing a fast-track mechanism for large IPOs allows indexes to reflect significant market events in a more timely manner."

The background to this rule change is SpaceX’s planned IPO targeting $75 billion—if successful, it will break the historical record for public listing fundraising. Meanwhile, Nasdaq has already shortened its index inclusion waiting period from at least three months to 15 days; FTSE Russell’s latest move further compresses the time window.

How the rules have changed

Under FTSE Russell’s new framework, investable market capitalization will be calculated by multiplying the freely tradable shares available at IPO by the closing price on the first trading day. FTSE Russell had solicited market feedback on this proposal in February, including reviews of current free float ratios and voting rights requirements.

FTSE Russell is a subsidiary of London Stock Exchange Group Plc. This adjustment aligns with similar measures taken earlier this year by Nasdaq, both aimed at preparing for potentially ultra-large IPOs. S&P Dow Jones Indices is currently evaluating whether to follow suit.

Structural pressures facing index providers

These rule changes reflect the deep structural pressures facing index providers. As companies choose to remain private for longer, their valuations at the time of listing are often significantly higher, making the traditional quarterly review mechanism less able to capture major market shifts in a timely manner.

Currently, more than $30 trillion of global assets are benchmarked to related indices, and the inclusion rules for these indices are either already effective or under review. The trend toward accelerated inclusion has also raised concerns among some investors, who believe that the rapid inclusion of IPO companies may expose passive funds to greater volatility risk and force them to buy stocks before market pricing is fully formed.

SpaceX and other giants’ listing expectations

This year, market attention is focused on SpaceX.

Elon Musk’s space exploration company is targeting an IPO scale of $75 billion, which could set a new fundraising record for public offerings. SpaceX is expected to list on Nasdaq, which has already completed its rule revisions.

Besides SpaceX, private tech giants such as OpenAI and Anthropic, with similarly massive market capitalizations, are also actively laying groundwork for eventual listings. These potential ultra-large IPOs are the driving force behind the race among major index providers to adjust their rules.

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