Financial leaders from four major states are demanding explanations from Nasdaq and FTSE Russell regarding recent policy modifications that favor SpaceX and other massive initial public offerings, urging the index companies to halt these changes until investor risks are properly assessed.
Communications obtained by Reuters on Thursday highlight worries about how Elon Musk’s aerospace and satellite firm could affect other investors with its unprecedented $75 billion market debut.
When stock trading commences, SpaceX’s massive market value and restrictive corporate control structure pose dangers including extreme price swings and potential conflicts between index companies and their clients, according to state officials.
Index funds operating on autopilot are prepared to purchase billions worth of SpaceX stock, timing dependent on its inclusion in major market indexes. Both Nasdaq and FTSE modified their admission standards by reducing requirements for trading history, while S&P Dow Jones maintained traditional criteria.
“We respectfully urge the FTSE Russell Index Governance Board to reconsider its methodology changes and not place the interests of listing companies and their underwriters ahead of the interests of the passive fund assets that will bear the cost of any resulting mispricing” that may occur with SpaceX or other IPOs soon to follow like OpenAI and Anthropic, reads one of the letters, sent to FTSE Russell and its parent, London Stock Exchange Group, or LSEG.
New York State Comptroller Thomas DiNapoli, New York City Comptroller Mark Levine, Illinois State Treasurer Michael Frerichs, and Maryland Comptroller Brooke Lierman signed the correspondence. Each manages state pension investments, including automated funds that would become mandatory SpaceX purchasers due to the index decisions.
An LSEG representative declined to comment.
Frerichs, Lierman, and Oregon Treasurer Elizabeth Steiner sent comparable correspondence to Nasdaq. Similar to the FTSE communication, the Nasdaq letter requested suspension of rule implementation unless proper investor impact studies were completed.
“If so, we request that this analysis be disclosed publicly. If not, we ask that you explain why a rule change affecting over $1.4 trillion in investor assets was adopted without such an analysis,” the letter states.
The officials also requested explanations regarding how Nasdaq managed internal conflicts and whether any corporations, including SpaceX or its consultants, influenced the new regulation’s creation.
Through a representative’s statement, Oregon’s Steiner expressed being “deeply troubled” by the exchanges’ decisions. They may compel institutions like retirement systems “to purchase stocks (through index funds) that have not proven their value or undergone the rigors of market correction,” she said.
Responding to the correspondence, a Nasdaq spokesperson stated via email: “Public markets look fundamentally different than they did a decade ago — companies are staying private longer, listing at larger scale, and arriving with more complex share structures. The updates to the Nasdaq-100 methodology reflect those shifts and were implemented following a formal public consultation.
“The changes were not designed for any single company, and are consistent with updates other major index providers have independently made in response to the same market dynamics,” the Nasdaq spokesman said.
