The following Letter Type B, or variations thereof, was submitted by individuals or entities.

Letter Type B:

I submit this comment in response to the proposing amendments to the Nasdaq-100 Index (NDX) methodology. The three proposed changes — (1) a "Fast Entry" rule reducing the seasoning period from three months to 15 trading days, (2) a 5x float multiplier for low-float securities, and (3) a shift to total (listed plus unlisted) market capitalization for eligibility ranking — represent, in combination, a fundamental departure from the index's role as a replicable benchmark. I urge the Committee to either withdraw these proposals or substantially redesign them before adoption.

I. The Fast Entry Rule Eliminates Necessary Price Discovery 

The existing three-month seasoning requirement serves a protective function for passive investors: it allows a newly listed security to establish a credible public trading history, develop liquidity, and permit institutional investors to form independent valuations before mandatory index inclusion forces buying at whatever price prevails at the moment of addition.

Reducing this window to 15 trading days — roughly three calendar weeks — for any company ranked in the top 40 of current NDX constituents by market capitalization would effectively eliminate this protection for the largest and most consequential IPOs. These are precisely the securities where the gap between IPO pricing, day-one trading, and any stable fundamental valuation is widest.

The rule change is also structurally asymmetric. A company with a $1.5–2 trillion market capitalization entering the NDX after 15 trading days would represent a weight of potentially 5–10% or more of the index. Passive vehicles tracking the NDX — including the Invesco QQQ Trust (QQQ), QQQM, and numerous institutional funds — would be compelled to purchase this position within a narrow implementation window, regardless of prevailing price, liquidity conditions, or any independent assessment of fair value. This is not timely inclusion; it is a mandated market-moving event that benefits the issuer and its pre-IPO shareholders at the direct expense of passive investors.

I request that the Committee retain the existing three-month minimum seasoning requirement, or establish a tiered framework in which the seasoning period scales with the security's expected NDX weight at inclusion.

II. The 5x Float Multiplier Artificially Inflates Index Weights and Creates Exit Liquidity for Insiders

The proposed float multiplier is the most structurally problematic element of the consultation. Under the current methodology, index weighting is based on total market capitalization. The existing 10% minimum free-float threshold provides a floor: securities with extremely thin public floats are excluded until a meaningful portion of shares reaches the open market.

The proposal would remove this threshold entirely and replace it with a 5x multiplier applied to any company with a free float below 20%. The multiplier caps at 100%, meaning a company with a 5% free float would be treated for weighting purposes as if 25% of its market capitalization were publicly tradable — a fivefold overstatement of actual investor accessibility.

To make this concrete: if a company were to IPO at a $1.75 trillion valuation and float approximately 5% of shares, roughly $87.5 billion in stock would be available for public trading. Under the proposed multiplier, the NDX would weight this security as though $437.5 billion in tradable stock existed. Every passive vehicle tracking the NDX would be required to hold a position sized to the inflated weight — not to the actual float. The practical effect is a forced demand signal of extraordinary magnitude targeted at a thin public float.
This creates a predictable sequence of harm:

1. Passive funds chase an artificially inflated index weight into a supply-constrained float, driving the price well above what organic demand would support.

2. Pre-IPO shareholders and insiders — holding the vast majority of shares — observe this price inflation with lock-up periods approaching expiry.

3. When lock-ups expire (typically 90–180 days post-IPO), selling pressure into the passive bid — still sized to an inflated weight — can produce rapid and severe price declines that passive holders cannot avoid.

This is not a theoretical concern. The mechanics are straightforward: index-mandated buying provides exit liquidity to pre-IPO shareholders at prices passive investors had no choice but to pay. The 5x multiplier amplifies this dynamic rather than mitigating it.

I request that the Committee retain the existing 10% minimum free-float requirement and remove the proposed 5x multiplier from the consultation entirely. If the Committee wishes to accommodate low-float securities, a float-adjusted weighting methodology — weighting companies by their actual public float rather than by total or artificially inflated market capitalization — would serve passive investors far better.

III. Total Market Capitalization for Eligibility Ranking Conflates Market Size with Investable Weight

The proposal to evaluate eligibility and ranking using total market capitalization — including unlisted, restricted, and insider-held shares — while retaining float-adjusted weighting for the actual index weight creates an internal inconsistency in the methodology. A company would qualify for NDX inclusion based on a market capitalization that passive investors cannot access, then be weighted in a manner that (absent the float multiplier) reflects only the tradable portion.
In isolation, this change is less objectionable than the float multiplier — it does not directly affect investor cash flows. However, when combined with the Fast Entry rule and the float multiplier, it serves primarily to lower the threshold for inclusion of high-profile IPOs with concentrated insider ownership and thin public floats. I request that this change be evaluated independently, with a clear explanation from the Committee of the investor protection rationale for basing eligibility on shares that passive investors cannot own.

IV. Governance Process and Conflict of Interest 

Index sponsors have a financial interest in attracting large IPO listings to their exchanges. The NDX is among the most valuable commercial index products in the world; QQQ alone has assets under management exceeding $300 billion. The combination of a listing venue, an index sponsor, and a consultation proposing rule changes that would benefit a specific class of anticipated large-cap IPO issuers raises questions that the Committee should address directly:

• Has the Index Management Committee received communications from representatives of anticipated IPO issuers — or their advisers — regarding these proposed rule changes prior to the issuance of this consultation? If so, was that contact disclosed to index users?

• What investor protection analysis was conducted prior to the proposal of the 5x float multiplier, specifically with respect to the impact on passive fund holders at lock-up expiry?

• How does this proposal interact with Nasdaq's obligations as a national securities exchange and its duty of fair dealing to the investing public?
Index methodology decisions of this magnitude — affecting the mandatory investment of hundreds of billions of dollars in passive capital — should be subject to independent governance review, not solely the discretion of an index sponsor with a direct commercial interest in the outcome.

Thank you for good and fair governance