> It's an index. The conventional way to market weight is to use market cap. The float rules are mostly for technical reasons around transaction costs for very large indices.

No the float rule is to avoid having to buy so much stock compared to the available stock that it would create irrational prices. This is probably going to happen with those IPOs. It's pure offer and demand!

To put it differently: Imagine a company is valued at 100B$ but only released 1% of its stock for sale (1B$). The NASDAQ100 includes it in its index based on the market cap only and because of that now needs to own about 100m$ of that stock. You are now trying to buy 100m$ out of only 1B$ available stocks. Prices are going to skyrocket artificially. If it was weighted on the float, it would only have been required to buy 1m$, which would make way more sense.

And an index can be whatever the company behind it wants it to be. The SP500 can decide absolutely whatever they want and every index fund will just have to agree and comply and buy based on those decisions.

But as everything if they do something stupid they lose credibility and customers. This is one of those instances in which they changed the rules in a way that made no clear sense and they will be remembered for that.

> No the float rule is to avoid having to buy so much stock compared to the available stock that it would create irrational prices

Correct.

> this is probably going to happen with those IPOs

Not due to any index-following investor.

> SP500 can decide absolutely whatever they want

Yup, S&P 500 is a committee-based index.

> one of those instances in which they changed the rules in a way that made no clear sense and they will be remembered for that

S&P never changed the S&P 500's rules.

NASDAQ 100 did. But from what I can tell, that was a brilliant piece of marketing. Nobody talked about them before. (QQQQ doesn't appear to have gained or lost net assets in that time, which isn't unexpected, it's a volatile fund.)