TheCorporateCounsel.net

Late last week, Nasdaq announced that its “Nasdaq 100” index will undergo a “special rebalance” – i.e., outside of its regular rebalancing schedule. The specific changes will be announced tomorrow and will take effect prior to the market open on Monday, July 24th.

This is the first-ever special rebalance for this particular index, which tracks 100 of the largest Nasdaq-listed domestic & international non-financial companies. As you might guess, this includes a lot of “Big Tech.” Here’s more detail from Reuters:

A special rebalancing, which is part of Nasdaq 100’s methodology to maintain compliance with a U.S. Securities and Exchange Commission rule on fund diversification, has taken place twice before, in 2011 and 1998, said Cameron Lilja, global head of index product and operations at Nasdaq.

The special rebalancing may be conducted at any time if the aggregate weight of companies, each having more than 4.5% weight in the index, tops 48%, according to Nasdaq. During the rebalancing, it is capped at 40%.

Nasdaq says that no companies will be added or removed from the index at this time – the rebalance will just adjust the relative weightings of companies in the index. The impact to companies in the index is that funds will need to buy & sell shares of the companies whose weighting changes. There’s some speculation that other indices will need to follow suit so that their customers don’t run afoul of the SEC’s diversification rule, but no announcements yet.

– Liz Dunshee