Important Index Events – What to Expect in 2026?

Peter Haynes:
The US market represented almost 65% of MSCI's ACWI Index. This raises its takes further on a topic that I know frustrates global asset owners, and that is the geopolitical concentration of their portfolios in the US market.
Welcome to episode 78 of Bid Out, a market structure podcast from North of 49. My name is Peter Haynes. I'm the host of this podcast series, and today I'm going to try something brand new. I'm going solo with a discussion on benchmark topics that I expect will be of interest to the global index community in 2026. Normally, I'm the one asking all the questions on these podcasts, so it's going to be different for me, and I hope you find it of interest and enjoyable. As many listeners know, my entire career, starting at the Toronto Stock Exchange in 1988 until now has been focused on benchmark construction and index user issues.
Over this 38-year period, the index business has changed dramatically. Today, I want to talk about some of the changes I've witnessed over my time that are focused on the index business, and more specifically, how some of these changes will shape the upcoming year in the markets. In short, I think this could be a big year for the index community, but only time will tell.
Let's start with the changing demographics of index usage. From a domestic perspective, indices such as the S&P TSX composite or FTSE 100 were historically important to local investors, both as a tool for broad market exposure passively, but also as a performance measurement instrument for the active fund manager community. These local benchmarks were also the primary tools used for investors to gain exposure to global markets. Up until the 1990s, it was common for investors wanting global exposure to own each country benchmark as building blocks to a global portfolio, and then to tilt exposures at the country level to fit portfolio bets, usually utilizing local futures for implementation of these tilts.
As the barriers to investing globally have fallen, in part due to electronification of trading and reduced restrictions on access to local markets for foreigners, this period coincided with an increase in usage for global benchmarks, first in the US with MSCI EAFE, the gaining prominence, and then over time with FTSE GEIS and MSCI ACWI as the dominant choices for global investing. As investors moved to global portfolios, focus was placed on a single security, single country classification to ensure indexers did not face double counting issues.
Today, very few, if any, asset owners are left with global passive portfolios built using domestic indices. These domestic benchmarks are now the exclusive domain of local investment funds for use as passive exposure vehicles, both through baskets or ETFs, or as performance measurement tools for active mandates. The only exception to this rule is the S&P 500, which remains truly a world index.
Coinciding with the evolving investment landscape, companies domiciled and developed markets were becoming increasingly multinational in nature, introducing greater complexity for index providers to create rules to determine where a company belongs from a country perspective with the tie-breaking rule, typically where a company is incorporated. Not all of the index providers treat every company the same when it comes to jurisdiction. Each index provider has its own set of rules.
Given the global nature of these companies and the gravitational pull of capital to the US market, given its global dominance, it really is no surprise that global companies domiciled in other jurisdictions want to relocate to the US to be eligible for the S&P 500. This has created a positive feedback loop for the US market. One of the first movers in this regard was NewsCorp, which was an Australian company with 75% of its business in the US that re-domiciled to the US in 2004 and was eventually added to the S&P 500. The move sent shockwaves through the Australian market, where the company was the second-biggest index name, forcing the S&P folks to create a second local benchmark to satisfy funds that felt NewsCorp should still be part of the local index, because in their view, it still remained an important part of the local market.
More recently, as we have documented ad nauseum in our index research, several UK companies have left the UK market for the US, and infrastructure company CRH recently became the first of this group of former UK issuers to make it into the 500 index. Unlike Australia, the local FTSE UK index rules were not adjusted initially to keep companies that flee to the US like CRH in the local index. More recently, some FTSE rule changes may make that possible going forward, and this remains a hot button for UK market participants as large cap issuers like AstraZeneca, the biggest UK company, and some of the other UK oil companies publicly mused from time to time about following CRH and others to the US market.
In fact, AstraZeneca will soon switch its deposit receipts to common shares in the US and some pundits think this might be the first step towards a full re-domicile. I suspect that local pressure in the UK will force the FTSE to keep Astra in the local index if it does re-domicile to the US and eventually is added to the 500 index, but this is one story to watch closely in the coming months. To be clear, we agree with the decision that a local benchmark provider might make to allow local companies re-domiciling elsewhere to stay in the local benchmark if that company maintains a significant presence in the local market. After all, these are global multinationals with a significant footprint around the world. Every one of these global companies naturally has a big presence in the US given the size of its economy, but also still in the legacy market, and in this case, it's the UK.
Importantly, there is virtually no overlap in index users between say the FTSE 100 and the S&P 500. So the issue of portfolio double counting is a non-factor when you talk about domestic benchmarks. In the case of the global index providers, they probably moved the re-domiciled stock to the US component of their global benchmark, which may or may not result in index or flows within the global benchmark universe, highlighting a key distinction between managing indices for a domestic versus global set of users. It's black on one side and white on the other.
The topic of domicile is one that has generated a lot of spilled ink in Canada too in the past couple years, with several Canadian-based interlisted companies seeking ways to broaden shareholder ownership and passive inclusion in US indices. Most famous amongst these issuers was Brookfield Asset Management in late 2024, whose then chair, Mark Carney, who happens to now be Canada's prime minister, mused publicly that there were no more shareholders in Canada for the company to target and that it needed more eyeballs on the stock from investors in the US and elsewhere.
Meanwhile, the company's industry peers like Blackstone and KKR were part of the S&P 500. To achieve the goal of US index inclusion that would unlock this untapped US investor base, which had previously remained exclusive to Brookfield's peers, the company moved its headquarters to New York. Sure enough, just a few months later in June of 2025, the stock was added to the Russell 1000 index, but it has still not been deemed a US stock by S&P and other important US index providers, so the mission by Brookfield Asset Management was only partially accomplished. We are not surprised by the decision by S&P to leave Brookfield out of its US total market index, or TMI as it's known by its acronym. TMI is the universe that determines US 1500 index eligibility, and despite the fact that others, including the company, thought it should be eligible for the 500, it is not yet in that candidate pool.
As I mentioned earlier, S&P and most other index providers still favor incorporation as its tiebreaker, so it's really not surprising that they have not yet added Brookfield to the eligible pool. That said, we do believe the time has come in 2026 for S&P to survey its index users about making global companies with shares that are duly listed in the US and elsewhere eligible for the S&P 500, as long as it can arrive at some rule that ensures these companies are not just listed in the US, but important parts of the US economy and US capital markets, and clearly the devil will be in the details in terms of this rule. This would return Canadian companies to an index that they were forced out of in 2002, that is the S&P 500, due to the double counting concerns, and it would pave the way for Brookfield Asset, Shopify, Agnico Eagle, Barrick Mining, and other large cap Canadian interlisted issuers to be added to the TMI with Shopify immediately becoming the largest candidate for S&P 500 inclusion.
Following Brookfield's leads, several other Canadian companies, including Shopify and Barrick, added the US headquarters to company filings. However, with one exception, these other issuers did not drop Canada's headquarters simultaneously, instead leaving two HQs on its US filings. The one exception was restaurant brands, symbol QSR, or as it's known in the US, RBI. After the flurry of these filings in March and April of last year, FTSE Russell shut down what it worried was an index arb by announcing that companies with more than one HQ on filings will stay eligible only to country of incorporation. Stay tuned over the first few months of 2026 to see if any Canadian issuers, including, but not limited to the names just mentioned, will drop Canadian headquarters to follow Brookfield asset and RBI into the Russell indices. And we can say with a pretty high degree of certainty that some issuers are musing about this topic as we speak.
Companies wishing to do so for this year's June index revision will need to have filings updated by Russell Rank Day at the end of April. This topic is not limited to FTSE Russell, that is the issue of domicile, as MSCI also has some names in its US index that are thought of as Canadian, namely Waste Connection, and one wonders if more will be moved by MSCI to its US designation.
On the topic of domicile with a very robust cross-border M&A calendar already in motion, domestic index providers are going to be faced with some very difficult decisions on how to handle some of the big deals on the calendar. Let's start with the public rumblings of a Rio Tinto Glencore merger in the mining space, the result of which would form the largest mining company in the world. What will happen to index inclusion for each of the two names in Australia and the UK?
Will Rio Tinto simply absorb the Glencore shares in the UK and keep its Rio Australian class separate? Or will a merged entity perhaps consider a different approach? It's easy for index providers to quote follow their rules, but at the same time, this may result in local markets withering away, and I don't think this should be the root followed in each and every case, but I admit this is a complex problem. For Canada, S&P is going to be faced with some tough decisions on whether to keep certain companies involved in cross-border M&A in its local indices. S&P already broadened its Canadian inclusion rules last year, allowing for RBA to return to the S&P TSX composite in June 2025. There are three large cross-border deals in motion currently involving Canadian companies, and given the environment, it's easy for one to expect more to follow.
As of today, the three deals are Anglo-Teck, Ovintiv-Nuvista, and Coeur Mining, New Gold, all three that based on S&P TSX index rules should result in the removal of the Canadian name from the local index. The first one, Anglo's merger with Teck has generated a significant amount of pushback in Canada, primarily from Canadian domestic active managers who believe the merged company remains an important part of the Canadian market despite incorporating in the UK and should therefore remain in the local index universe using a combined Teck-Anglo share account. The deal is expected to close late in 2026, and this will be an interesting file to watch. And if we're betting on this case, we would expect S&P to find a way to keep Teck-Anglo in the Canadian indices, as well it'll, I'm sure, be up-weighted in the FTSE 100. In order to avoid going too deep down the rabbit hole though, our view generally speaking as a rule of thumb is that domestic index overlap should be limited to large cap domestic benchmarks. It is important that local benchmarks remain representative of the investment universe for its users while preventing inclusion gaming that may otherwise occur.
A new topic that is sure to generate significant buzz in index circles in 2026 is the US IPO calendar and index treatment for mega-sized issuers. Specifically and based solely on press reports, there is the potential for IPOs on not one, but two companies that might be valued at more than $1 trillion in the US, and that is SpaceX and OpenAI. Currently, FTSE GEIS and MSCI ACWI have large IPO fast track rules that allow companies into these indices in five and 10 days respectively after the IPO. However, for the popular US domestic indices, new IPOs can wait as much as four and a half months for inclusion in the Russell 3000, and in the case of the S&P 1500, companies must wait for at least one year and be profitable, though they can be included in the total market index right after five days after issuance.
For the S&P 500 large cap index, the profitability test can prove troublesome as mega cap growth companies that become significant parts of the equity market must wait on the sidelines for index inclusion. The result is that shared performance from these mega companies does not contribute to benchmark returns and it can be material. Microsoft famously waited over eight years from its IPO to get into the S&P 500, and more recently, Tesla was the sixth-ranked company in the S&P 500 when it was finally added in December 2020. It's important to remember constituent size can cause significant impact as index followers build positions in the stock ahead of a company's inclusion. For Tesla, the stock went from $300 billion in market cap to 500 billion in market cap from the time of its index inclusion announcement in mid-November to its 500 inclusion at the December rebalance in 2020.
This begs an important question, can an index change simply be too big for the market? And the answer I think is yes. When these monster names are added at full flow or even at their IPO, index providers with impactful flows definitely need to consider traunching inclusion over more than one date. The actual mechanics of index inclusion of the mega IPOs will also be interesting to watch, specifically what will be the float calculation on index inclusion. Typically, on an IPO, all shareholders, including the issuer, are locked down from selling for a window of time post-IPO to ensure orderly trading of the stock. These other shares are then released from escrow at some schedule agreed to by the underwriting group and the issuer and selling shareholders. It will be interesting if this is the case for the mega IPOs, given how broadly the stock is already held prior to going public.
In terms of index inclusion, benchmarks that are float-weighted normally only include shares that are part of the IPO on the initial index weighting. Then when the shares come out of escrow, the float is increased to reflect freely tradable shares. This means the real impactful index event for SpaceX and OpenAI may not be the IPO inclusion, but in fact, a quarterly update following the IPO. Again, thinking about the sheer size of these names, it will be interesting to see if selling shareholders or the companies themselves try to time secondary offerings against index inclusion or significant up-weights. This is a very tricky exercise. It's only been done very well one time, and that was when Facebook was added to the S&P 500, I believe, in 2012.
Final point on this topic. When Tesla migrated from the S&P Completion Index to the 500 index, some market participants were caught off guard by the sheer amount of selling from Completion Indexers, and this poses a problem for S&P when it comes to these mega cap IPOs. If these mega cap IPOs sit in the Completion Index for long, then they will definitely distort the returns of this index, which is now fairly widely followed. After all, a $1 trillion float market cap company would equal an 11% weighting in the Completion Index. This is yet another reason to want to get these mega caps into the right segment of the market sooner rather than later.
Who knows what other potential large IPO candidates will debut in 2026, but we know this much. There will be industry pressure to get these names in the US indices sooner than the rules dictate currently. Our take on the US fast track rules is as follows. In the case of FTSE's Russell US indices, we do believe it makes sense to create a fast track inclusion rule like FTSE's global GEIS system. And for the S&P 500, I do think it's high time that they consider revisiting the 12-month profit rule for mega caps, which drives a minimum listing period of a year before index eligibility.
IPOs and fast tracking will probably be the most important index issue of 2026, and if and when some of these large IPOs are added at full weight to popular indices, the problem of concentration of large cap tech names in benchmarks such as some of the S&P select sectors, the NASDAQ 100 potentially, and the Russell growth indices may be even more of an acute problem. When the dust settles on the current IPO calendar, the end result will likely be even more market concentration in the US, assuming, of course, that the AI bubble does not burst. As of the end of 2025, the US market represented almost 65% of MSCI's ACWI index. This raises its takes further on a topic that I know frustrates global asset owners, and that is the geopolitical concentration of their portfolios in the US market.
While on the surface, it might seem irrelevant where global companies are domiciled, the current US administration seems to be quick on the trigger when it comes to rulemaking. Take, for instance, the recent musings about banning buybacks and dividends for US companies in the defense industry if they don't meet the government's demands for more investment in plant and equipment, or talk of limiting institutional ownership of single-family homes, which had an impact on some of the companies in that space. This type of interventionist behavior might work for a populist narrative, but it is not necessarily good for investors. And of course, the worst case scenario would be nationalization of critical industries, which it would be hard to dismiss completely given recent government equity investments by the US and various important US companies. This may force global index providers to consider some sort of foreign content or foreign inclusion factor to limit exposure to names that have been impacted by new government interventions.
Speaking of Russell, 2026 will be a very interesting year for the US index system as it moves from one single annual vision to a semi-annual rebalanced calendar. This represents the first major change to Russell's US index operations since the index provider went from annual to quarterly additions for IPOs in 2004. As discussed earlier, we expect the topic of IPOs to be front and center for Russell this year, but the move to semi-annual rebalancing is also very topical. Clearly, the June 2026 rebalance will be as big, if not bigger than June 2025, but what will December 2026 look like?
Our best guess is that December is materially smaller in terms of migrations and additions from outside the 3000 universe, as simple math would suggest that with less time, not as many companies will move the necessary ranking spots to result in migrations. That said, when combining December 2026 with June 2027, we do believe the semi-annual rebalancing events will add up to more turnover than a single annual event that would take place each June. And our best guess is overall Russell turnover could be 10 to 20% higher with two versus one event per year.
Another index topic that made headlines in the fall of 2025 was the continued index eligibility of DATCOs or digital asset treasury companies. DATCOs are defined as companies that hold digital assets on the balance sheet. Several public issuers, included in popular global benchmarks, have started to diversify traditional treasury operations to include digital assets, and in some cases, treasury activities became the defining nature of companies that otherwise operate in other industries, whether it be enterprise software or hoteling. The tipping point occurred when Metaplanet, a Japanese hotel operator, completed an equity raise last year that was almost entirely used to purchase Bitcoin. MSCI decided to pause the share increase for Metaplanet pending further investigation, and eventually the index provider launched a consultation on the index eligibility for companies with significant holdings of digital assets on balance sheet.
The demarcation marker for MSCI proposed was 50% of balance sheet in digital assets. And MSCI published a list of companies potentially impacted by this rule in a later update. Admittedly, and I put myself in this category, the index community did not know much about DATCOs when this first became an issue, and the consultation seemed like a slam dunk that MSCI would be removing the companies with a high proportion of digital assets on balance sheet once it completed its due diligence. However, DATCOs began to push back on the index decision with a high profile education effort, including publishing letters sent to MSCI in support of continued index inclusion. Strategy, the largest of the DATCOs, symbol MSTR, sent their own letter to MSCI, which it made public with several key arguments. First, Strategy highlighted the difference between operating companies that have a mandate flexibility like Strategy and compared that with fund companies that are single purpose like a Bitcoin ETF.
Next, they argued that the 50% asset test was subject to accounting gaming, given different accounting rules for companies based in the US that had digital assets on balance sheet versus global gap accounting and the potential for gaming. Then they argued that by excluding DATCOs, the index provider was losing its neutrality, picking winners and losers. And finally, and in our opinion, most importantly, Strategy argued that the decision to remove DATCOs was simply too hasty. More work needed to be done in terms of education and understanding. In the end, MSCI agreed, and it announced that it would not remove DATCOs at the upcoming February review and will now undertake additional analysis, including parameters around what is and what is not an operating company. We think this analysis is going to get tricky. For instance, why is a company that owns stakes in other public companies and is now the 10th biggest stock in the US market, Berkshire Hathaway, in the index?
Isn't Berkshire similar to a fund run by an asset manager, and Fairfax is a Canadian equivalent of Berkshire in this sense? Or what about private equity firms or REITs? These companies own stakes in other companies, or in the case of REITs, own a single building and are more HOLDCOs in some people's eyes than operators. We think this rabbit hole is one that the index providers will not want to go down too far and expect the DATCO debate to quiet down eventually. We suspect the other major index providers that are keeping an eye on this space will also see the temperature go down and they will no longer be focused on making potential changes to their benchmarks. Perhaps if some of the larger issuers go on a massive digital asset buying spree again, this issue will percolate to the surface. But for now, I think the complexity of the debate and the inconsistency of rural applications will result in the index providers leaving well enough alone.
While the topic of DATCOs is interesting from an index perspective, so too is the potential impact of digital asset technology, or the blockchain as it is known, on trading of companies that are currently included in US or global benchmarks. In 2026, the SEC is expected to grant exemptive relief to US-based digital asset trading platforms that are outside of traditional finance in order to allow them to trade instruments that give equity exposure to market participants. While there are varying forms of equity exposure offered by digital trading platforms, we expect one of these to be natively issued securities from the issuer to be traded alongside shares of the same companies inside traditional finance. And this is a topic we covered at length in previous episodes of Bid Out and also through our US market structure research led by Reed Knock. This trading introduces some interesting questions for index providers in terms of what data should be included in liquidity analysis and whether there will be post-trade transparency and whether natively issued shares should count towards index flow, and for that matter, can ownership structures still be easily determined.
The move to trading outside of TradFi also more easily enables 24-hour trading, which also impacts index providers as eventually there may be demand for calculating important industry indices 23 hours or 24 hours a day, and this will make index changes harder for index providers to implement. This may not be a 2026 issue, but it certainly will be a topic to contemplate in the next few years. And in the event one of the potential large IPO issuers decides to support the token space by offering a portion of its shares in token form, then it will surely be game on sooner rather than later.
Next, we're going to watch with keen interest whether the new Texas Stock Exchange expected to make its trading debut in the middle of 2026 continues down a path towards including corporate listings as expected. Should Texas be successful in wooing some corporate issuers away from the NASDAQ NYSC listings duopoly, then this will have implications for traders focused on index re-balancings in the US. We're confident that Texas can create a mock facility that is well-designed and satisfies industry demands. Our advice to them is not recreate the wheel, create what is already a very successful model in the US, and that is something that's like NASDAQ's mock, and this will be key for the companies to become index eligible, but that is not the hard work.
The hard work is making sure the industry can adapt its workflows to take into consideration a third data feed of mock information. This may seem simple or trivial on the surface, but it should not be overlooked by Texas officials as they build out their exchange offering. While most of the new exchanges in the US are me-too efforts with no differentiation, we're confident that Texas does not fit this bill and will be a thorn in the side of the listings duopoly of NASDAQ NYSE over the next few years. The good news for the three firms is that there's probably room for three listings platforms in the US, and this is the only market in the world where that would make sense.
Finally, we will continue to watch with keen interest for landmines that will explode from time to time when index providers change rules or ETF issuers change benchmarks. Recall, in 2025, FTSE expanded its universe of eligible small cap names for its Canadian GEIS benchmark, and this resulted in massive buying of this segment of the Canadian market, a space that is dominated by mining companies which have been red-hot in the current tape. Also, recall that VanEck switched its large cap gold ETF from NYSE's Arca Gold Miners Index to a Market Vectors index, and the fallout in terms of flows was massive for the sector. These events are unpredictable other than to say we predict more to follow in 2026.
That is all I have for today. While I think we've got a pretty good pulse of the index space, surely there's going to be some topics that come up along the way, specifically in jurisdictions where we're not as close to the action such as Europe and APAC. The unpredictability of the index space is what makes it so interesting, and we look forward to continued dialogue with industry participants in the months that follow. I hope you enjoyed this episode of Bid Out, and I'll be back soon with another pod, but this time I promise to bring back real guests. Until then, I bid you ado.