S&P Dow Jones Indices will keep its existing eligibility requirements for benchmarks including the S&P 500, rejecting a rule change that could have allowed newly public megacap companies such as SpaceX, OpenAI, and Anthropic to enter the index faster.
S&P said Thursday it will not grant exceptions to its financial viability, seasoning, and investable weight factor requirements solely based on market capitalization. The decision keeps the S&P 500’s stricter framework in place even as rival index providers move to accelerate inclusion for large listings.
The ruling means SpaceX would not be eligible for S&P 500 inclusion until at least one year after its listing. The company would also need to satisfy the benchmark’s profitability and public float requirements before joining the world’s most heavily tracked stock index.
For SpaceX, the setback removes a potential wall of forced buying from funds that track the S&P 500. Fast inclusion would have generated about $14 billion in passive demand for SpaceX, more than $8 billion for OpenAI, and about $4.6 billion for Anthropic, according to Bloomberg Intelligence estimates.
The decision comes as SpaceX prepares what could become the largest IPO in history. Reuters reported that the company is seeking to raise $75 billion at a $1.75 trillion valuation, a level that would place it among the largest US listed companies immediately after going public.
The debate has intensified as private companies reach public market scale before listing. SpaceX, OpenAI, and Anthropic are expected to enter public markets with valuations that rival major public tech companies, challenging index rules designed for companies that typically spent more time trading before becoming benchmark candidates.
Supporters of fast inclusion argue that indexes should reflect the largest companies in the market as quickly as possible, especially when newly listed firms are already economically significant. Keeping them out, they argue, can make benchmarks less representative of the market investors actually own.
Critics say the existing rules around profitability, float, and trading history exist to protect benchmarks from chasing hype. Adding newly public companies too quickly could expose passive funds to volatility and force index trackers to buy shares before reliable market pricing has been established.
S&P’s decision diverges from Nasdaq and FTSE Russell. Nasdaq changed its rules to allow qualifying IPOs to enter the Nasdaq 100 after 15 trading days, while FTSE Russell adopted a fast entry process that could allow large IPOs into certain indexes after five trading days.
The S&P 500 remains the most important prize for passive flows. Bloomberg Intelligence data shows about $7.5 trillion in passive funds track the index, while another $3.4 trillion in active assets are benchmarked against it.
The decision also underscores how much market power now sits inside passive investing. US passive domestic equity mutual funds and ETFs held roughly $14.4 trillion in assets at the end of April, compared with $8.2 trillion in active funds.
