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Some of the criteria for inclusion include headquarters in the
United States, listing on NYSE or Nasdaq and profitability over
the past year.
S&P also requires companies that complete IPOs to be traded on
an “eligible exchange” for at least 12 months before they can be
considered for inclusion into an index. The committee weighed
shortening that requirement to six months, but opted not to do
so.
The committee also decided against creating exceptions to its
guidelines solely based on market capitalization, or how the
stock market gauges a company’s value.
The move by S&P comes as other major U.S. index operators have
taken steps to add very large companies soon after they make
their stock market debut.
In March, Nasdaq announced new guidelines that allow for
expediting the addition of large companies fresh off their
initial public offerings into its benchmark Nasdaq 100 Index.
Nasdaq's guideline change is meant to ensure that the index,
which tracks the 100 largest, non-financial companies listed on
the Nasdaq, accurately reflects the market sooner, rather than
possibly months after a very large company goes public.
In its decision, S&P noted that there may be trade-offs in
sticking to its guidelines for index eligibility, but said its
current approach provides its indexes “substantial market
coverage and sector balance.”
Many pension plans and mutual funds use S&P and Nasdaq indexes
as an investing benchmark.
The moves by S&P and Nasdaq come as several of the biggest
artificial intelligence companies in the U.S. are setting the
stage for blockbuster IPOs this year.
Elon Musk’s SpaceX is expected to go public this month with
plans to raise up to $75 billion, which would make it the
largest-ever stock market debut.
Meanwhile, Anthropic, the maker of the Claude chatbot, announced
Monday its plans for a proposed IPO, while OpenAI, maker of
ChatGPT, is planning an IPO as soon as this fall.
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