NASDAQ Global Select Market Composite

Key takeaways

• The NASDAQ Global Select Market Composite is a market-capitalization-weighted index of NASDAQ Global Select Market listings.
• It represents a selective subset of U.S. and international companies that meet the strictest NASDAQ financial, liquidity, and corporate governance standards.
• NASDAQ operates three tiers—Global Select, Global Market, and Capital Market—ranked by listing requirements and typical company size.
• Companies are reviewed regularly and can be promoted or demoted between tiers based on ongoing compliance and market capitalization.

What it is

The NASDAQ Global Select Market Composite tracks the performance of companies listed on the NASDAQ Global Select Market. It includes a large number of U.S. and international stocks that satisfy stringent eligibility criteria, making it the most exclusive NASDAQ tier for larger, well-established companies.

How the index works

• Market-cap weighted: Constituents are weighted by market capitalization, so larger companies have a bigger influence on the index.
• Composition: The index comprises the stocks that meet NASDAQ’s Global Select listing standards. The exact number of constituents can change as companies are added, removed, promoted, or demoted.
• Ongoing review: NASDAQ conducts regular reviews of listed companies. Stocks that meet higher-tier requirements may be promoted; those that fall short risk demotion to a lower tier.

NASDAQ market tiers — brief comparison

• Global Select Market: Most selective tier with the strictest financial and liquidity requirements; typically includes large-cap companies.
• Global Market: Mid-level tier with less stringent standards than Global Select but tougher than the Capital Market.
• Capital Market: Entry-level tier for smaller companies with the least demanding listing requirements.
  Note: Corporate governance requirements are consistent across all three tiers.

Listing requirements and process

Companies seeking a Global Select listing must submit an application and satisfy a set of financial, liquidity, and governance standards. Key points:
* Application review: NASDAQ’s Listing Qualifications group reviews applications, issues comment letters if needed, and works with companies to resolve issues before approval. The review typically takes several weeks.
* Financial standards: NASDAQ evaluates applicants against one of several alternative standards, commonly grouped as:
– Earnings-based standard
– Capitalization with cash-flow standard
– Capitalization with revenue standard
– Assets with equity standard
* Liquidity requirements: Vary depending on whether the company is an IPO, spinoff, or already-trading stock.
* Discretion: Even if an applicant meets stated criteria, NASDAQ can deny listing or impose additional conditions to protect investors and the public interest.

History and purpose

The Global Select tier was created when NASDAQ reorganized its market structure to better reflect the global scope and segmentation of listed companies. The tiering clarifies listing standards and helps investors distinguish companies by size and regulatory scrutiny.

Conclusion

The NASDAQ Global Select Market Composite provides a focused view of NASDAQ’s most rigorously vetted listings. Its market-cap weighting and selective membership make it a useful benchmark for tracking the performance of larger, well-established companies on NASDAQ.