What is the NASDAQ Global Select Market Composite (NQGS)?
Key takeaways
– The NASDAQ Global Select Market Composite (ticker: NQGS) is a market-capitalization‑weighted index that tracks U.S. and international stocks listed on the NASDAQ Global Select Market. (Nasdaq Global Indexes)
– It covers the most selective tier of NASDAQ listings—companies that meet NASDAQ’s strictest financial, liquidity and corporate‑governance standards. (Nasdaq; Investopedia)
– The Global Select Market was created in July 2006 when the former National Market was split into two tiers; the Global Select Composite includes roughly the largest one‑third of NASDAQ companies. (Investopedia)
– NASDAQ reviews listings annually (each October) and companies can be promoted or demoted among NASDAQ tiers based on market capitalization and continuing compliance. (Investopedia)
Understanding the NASDAQ Global Select Market Composite
– What it tracks: The NQGS aggregates all securities that are listed on the NASDAQ Global Select Market and weights them by market capitalization, so larger companies have a proportionally larger influence on the index performance. (Nasdaq Global Indexes)
– Purpose: The Composite is intended to represent the performance of NASDAQ’s most stringently listed companies, including both domestic and international issuers, offering investors a view of the higher‑tier NASDAQ market segment. (Investopedia)
How the Global Select tier fits into NASDAQ’s structure
– NASDAQ has three primary listing tiers:
1. NASDAQ Global Select Market (most stringent requirements)
2. NASDAQ Global Market (intermediate)
3. NASDAQ Capital Market (small‑cap / less stringent)
– Corporate governance standards are consistent across all three tiers, but financial and liquidity requirements get stricter as you move up to the Global Market and especially the Global Select Market. (Investopedia)
History and scope
– The split into Global Market and Global Select Market took place in July 2006; the distinction was designed to reflect NASDAQ’s global scope and make tiering more explicit rather than to change listing standards. (Investopedia)
– As of August 2020, the Global Select Composite contained more than 1,400 stocks that met NASDAQ’s strict requirements. (Nasdaq Global Indexes; Investopedia)
Listing and ongoing qualification: what matters
– To be part of the Global Select Market (and thereby included in the Composite), a company must meet strict requirements in three broad areas:
– Financial standards (Nasdaq provides four alternative financial standards; a company must meet all criteria of at least one standard)
– Liquidity requirements (vary depending on whether the company is an IPO, spinoff, or already trading)
– Corporate governance standards (same across NASDAQ tiers)
– NASDAQ retains discretion: even if a company meets initial criteria, NASDAQ may deny listing or impose additional conditions to protect investors and the public interest. (Nasdaq; Investopedia)
Listing application process — practical steps for companies
1. Self‑assess eligibility
– Review NASDAQ’s Initial Listing Guide and compare your company’s financials, market cap, liquidity metrics and governance to Global Select standards. (Nasdaq Initial Listing Guide)
2. Prepare documentation
– Assemble audited financial statements, corporate governance documents (charter/bylaws, board composition, independence), shareholder records, and disclosures required by NASDAQ and the SEC.
3. Submit the application
– File the NASDAQ listing application and pay applicable fees. Expect NASDAQ to conduct a preliminary review. (Nasdaq)
4. Respond to NASDAQ’s comment letter
– NASDAQ’s Listing Qualifications Staff issues a comment letter identifying issues to resolve. Address each item promptly and comprehensively.
5. Await final decision and scheduling
– If issues are resolved, NASDAQ completes review and approves the listing. Typical processing time for an initial listing application is roughly four to six weeks, though timing varies by case. (Nasdaq)
6. Prepare for ongoing compliance
– Maintain the financial and governance requirements and monitor market capitalization and liquidity—stocks are reviewed annually for continued proper tier placement. (Investopedia)
Practical checklist for companies seeking Global Select listing
– Meet one of NASDAQ’s financial standards (see NASDAQ Initial Listing Guide for the four alternatives).
– Meet liquidity and public float thresholds appropriate to your situation (IPO vs. continued listing).
– Have robust corporate governance policies (board independence, audit committee, reporting practices).
– Prepare for outreach and possible conditions from NASDAQ even after eligibility is demonstrated.
– Plan for annual re‑reviews and potential tier reclassification based on capitalization and performance.
How investors can use the Global Select Composite
– Benchmarks and exposure: NQGS provides a benchmark for investors who want exposure to NASDAQ’s largest and most tightly regulated companies.
– Market‑cap weighting: Because it is market‑cap weighted, the index’s returns are influenced heavily by its largest constituents—useful to know when evaluating concentration risk.
– Comparative analysis: Compare NQGS performance with other NASDAQ tier composites (Global Market Composite, Capital Market Composite) to assess how large‑cap NASDAQ names are performing relative to smaller or less‑stringently‑listed peers.
– Rebalancing and monitoring: Index composition is affected by annual reviews and corporate actions; investors and fund managers should monitor for promotions/demotions between tiers.
Governance and reclassification
– Annual review: NASDAQ’s Listing Qualifications Department reviews the Global Market and Global Select listing placements (commonly in October) to determine if companies should move between tiers based on capitalization and compliance. (Investopedia)
– Promotion/demotion: Companies that grow and meet stricter market cap thresholds can be promoted; those that fall short may be demoted to a lower NASDAQ tier.
Limitations and things to watch
– Date sensitivity: Specific counts of constituents and precise qualification thresholds evolve—always consult the current NASDAQ listing rules and index documentation for up‑to‑date details. (Nasdaq)
– Concentration: Market‑cap weighting can produce concentration risk if a few large companies dominate the index.
– Discretion: NASDAQ can deny listing or impose conditions even when objective criteria appear met.
Sources
– Nasdaq Global Indexes. “NASDAQ Global Select Market Composite (NQGS).” Accessed Aug. 28, 2020.
– Nasdaq. “Initial Listing Guide,” pages 4, 6–10. Accessed Aug. 28, 2020.
– Investopedia. “NASDAQ Global Select Market Composite.” Accessed Aug. 28, 2020.
If you’d like, I can:
– Pull the current (today’s) list of NQGS constituents and their weights, or
– Summarize the four specific financial standards NASDAQ uses to qualify issuers for Global Select (requires referencing the current Nasdaq Initial Listing Guide). Which would you prefer?