State Treasurers Challenge Index Rules That Favor SpaceX's $75B IPO

Four state treasurers just told Nasdaq and FTSE Russell to pump the brakes on rewriting index rules to accommodate SpaceX's $75 billion debut — and they're arguing over $1.4 trillion in passive fund assets.

Why State Fiduciaries Are Pissed Off

New York State Comptroller Thomas DiNapoli, New York City Comptroller Mark Levine, Illinois State Treasurer Michael Frerichs, and Maryland Comptroller Brooke Lierman signed a letter to FTSE Russell and its parent LSEG. Oregon Treasurer Elizabeth Steiner joined Frerichs and Lierman on a similar letter to Nasdaq.

The core complaint: both index providers shortened trading-history requirements specifically to let SpaceX — and soon OpenAI, Anthropic, and other megacap IPOs — get into indexes right after their listings. That forces state pension funds and other passive vehicles to buy shares at potentially inflated prices before the market has any real trading history to judge fair value.

Oregon's Steiner put it bluntly: the exchanges may be forcing retirement plans "to purchase stocks (through index funds) that have not proven their value or undergone the rigors of market correction."

The Specific Rule Changes and the $1.4 Trillion Question

Nasdaq and FTSE Russell both relaxed their entry criteria. S&P Dow Jones held the line. The letters ask for a formal investor impact analysis — and if none exists, they want a public explanation of why a rule change affecting over $1.4 trillion in investor assets was adopted without one.

The letters also demand to know whether SpaceX or its advisers had any role in crafting the new rules, and how Nasdaq balanced internal tensions between listing companies and index users.

A Nasdaq spokesman defended the changes as reflecting a market where companies stay private longer, list at larger scale, and arrive with complex share structures. He said the updates followed a formal public consultation and weren't designed for any single company.

What Happens Next

LSEG declined to comment. The officials didn't issue a threat, but the implication is clear: if index providers put the interests of listing companies and their underwriters ahead of the passive fund assets that will bear the cost of any resulting mispricing, state treasurers will escalate.

The outcome of this fight will set the precedent for how the next generation of megacap IPOs — including valuation monsters like OpenAI and Anthropic — enter the index ecosystem. If the treasurers win, expect index providers to think twice before bending rules for any single company's debut.

Source: States challenge Nasdaq, FTSE Russell for fast-tracking SpaceX
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