TD Securities’ Peter Haynes outlines the timeline for SpaceX index inclusion

Added: 2026-05-28

[00:00:00]Peter Haines is head of index and market structure research at TD Securities.

[00:00:04]Peter, welcome. It's good to have you here.

[00:00:06]>> Uh thanks very much.

[00:00:07]>> Let's start with the fast-track rules.

[00:00:09]What do they allow specifically?

[00:00:12]>> Uh the index providers, what they need to do is to make sure that their benchmarks are properly representative of the universe of stocks. And when you see an IPO the size or or proposed size of SpaceX and then ultimately will be a trillion-dollar company in the benchmark, uh the benchmarks need to be reflective of those large-cap names. So, they need to find a way to get them in the index uh as soon as practical. The index needs to be investable. So, naturally that's not going to happen at the IPO, but sometime after that IPO.

[00:00:41]So, uh what we're seeing amongst the index providers that you just mentioned is a plan to include SpaceX and other mega-cap IPOs over certain size thresholds in the indices between 5 days after the IPO's priced and 15 days. And that's a I think a fair balance between ensuring those indices, uh in particular the names you mentioned, are properly representative of the universe of securities including these mega-cap IPOs, but at the same time have traded for at least a few days in order for the price volatility of the IPO to uh normalize.

[00:01:19]>> Let me jump in here cuz I think there's a lot of questions and and and misunderstanding. Uh I thought and and a lot of people think and maybe this is mis- this isn't correct that one of the purposes of these rules that places like the S&P, I don't know what the Nasdaq 100 rules are specifically, was to make sure companies had reached certain financial benchmarks or governance kind of hurdles that they felt it was appropriate for them to join these blue-chip indices. Is that the case?

[00:01:50]>> Yeah, yeah. There's only one major provider that has financial thresholds in terms of gaining access to the benchmark, and that is S&P for its system of the 500, the mid-cap, and and the and the small-cap 600. Uh S&P has proposed as part of its mega-cap rules to bypass or waive the profitability test that has historically existed, um which required companies to be profitable in the past 12 months. Uh they are going to waive that rule for uh mega-cap IPOs uh and allow potential entry based on their current proposal, which has not been finalized, at 6 months are be eligible at 6 months after the IPO. So, you can see S&P is a bit of an outlier relative to the other benchmark providers who are making these changes much quicker.

[00:02:38]>> But, I I guess that I I would say, "Okay, if the idea behind this, and for years this has been an issue with companies who have wanted to gain entry to the S&P, but had to wait until they were basically mature enough to have earned it based on real earnings, and not just market cap. Market cap we can create out of thin air with enough hype." SpaceX has $19 billion in revenue, as I understand it, 25 or so billion dollars of losses. So, it's in a net loss position. Why should it be fast-tracked for entry? Why should its sheer existence force it into any of these indices?

[00:03:10]>> It's a tricky question to answer, but the reality is the benchmark is supposed to be representative of a universe of stocks and not be judgmental with respect to whether a company is profitable or what its future outlook is. In the case of S&P, they have maintained up until now policies that, as you say, limit the access to the index to only profitable companies. The reality is once you're in an S&P benchmark, if you merged with an unprofitable company, you would remain.

[00:03:37]If you migrated from one bench one say the small-cap to the large-cap, you would remain. So, there's already reasons without having to be profitable, I should say. So, there's already ways in which uh you can be part of those indices and essentially bypass the rules. And so, our view is that uh is that the profit test is past its best before date and that benchmarks the importance of the benchmark is to ensure that it's properly reflective of the universe of stocks. And so, when these mega caps come along and they are literally in the case of SpaceX potentially as big as the 10th biggest company in the US market >> Right.

[00:04:13]>> by the time all the locked up shares come are released. We need to get those bench those securities into benchmarks to ensure those benchmarks remain properly representative.