Description

BSE Index Services announces methodology changes for fast-track inclusion of significantly sized IPOs and spin-offs in BSE AllCap and related indices, effective December 2, 2025.

Summary

BSE Index Services Private Ltd has announced changes to the methodology for fast-track inclusion of newly listed companies in BSE AllCap and related Size and Sector Indices. The revised criteria expand eligibility from top 10 companies (based on one-month average) to top 200 companies (based on average total market capitalization), with a new monthly review schedule. Changes are effective December 2, 2025.

Key Points

  • Fast-track inclusion criteria expanded from top 10 to top 200 companies based on average total market capitalization
  • Applies to companies listed via IPOs or spin-offs
  • Companies must satisfy all eligibility and index construction criteria
  • New monthly review window: companies listed between Monday following 3rd Friday of T-2 month until 3rd Friday of T-1 month
  • Data evaluation period: one month ending 3rd Friday of current month
  • Index addition timing: market open on Tuesday following first Monday of each month
  • Previous system provided 5 days’ notice; new system follows monthly schedule

Regulatory Changes

Previous Methodology:

  • Fast-track inclusion required IPO to be among top 10 companies based on one-month average daily total market capitalization
  • Companies added with five days’ notice to clients

New Methodology:

  • Fast-track inclusion requires company to be ranked among top 200 companies based on average total market capitalization
  • Eligibility checked for listings occurring between Monday following 3rd Friday of T-2 month until 3rd Friday of T-1 month
  • All data points considered for one-month period ending 3rd Friday of current month
  • Index additions occur at market open on Tuesday following first Monday of each month

Compliance Requirements

  • Market participants should adjust their index tracking and rebalancing strategies to account for the new monthly inclusion schedule
  • Index fund managers need to prepare for potential constituent changes on the Tuesday following the first Monday of each month
  • Companies seeking fast-track inclusion must meet all standard eligibility and index construction criteria in addition to market cap ranking

Important Dates

  • October 29, 2025: Announcement date
  • December 2, 2025: Effective date for methodology changes
  • Ongoing: Monthly review cycle with additions on Tuesday following first Monday of each month

Impact Assessment

Market Impact:

  • Broadens eligibility pool for fast-track inclusion from top 10 to top 200 companies, potentially increasing number of newly listed companies entering indices sooner
  • Standardized monthly schedule provides more predictability for index rebalancing compared to ad-hoc five-day notice period
  • May affect passive fund flows and index constituent trading volumes around monthly rebalancing dates

Operational Impact:

  • Index fund managers will need to adjust operational processes to align with monthly inclusion schedule
  • More transparent and systematic approach to fast-track inclusions
  • Reduces urgency of implementation (monthly vs. 5-day notice) allowing better preparation

Affected Indices:

  • BSE AllCap Index
  • Related BSE Size Indices
  • Related BSE Sector Indices

Impact Justification

Methodology change affects index composition rules for newly listed companies but does not impact existing constituents or trading operations directly.