The Nasdaq 100 Index is a basket of the 100 largest, most actively traded companies listed on the Nasdaq stock exchange. The index includes companies from various industries except for the financial industry, like commercial and investment banks. These non-financial sectors include industrial, technology, healthcare, and others.
The Nasdaq 100, index securities must be listed exclusively on a Nasdaq exchange. This can include common stocks, ordinary shares, American depositary receipts (ADRs), and tracking stocks. They must also be non-financial and have traded for at least three months on an exchange.
The liquidity criteria require that each security have a minimum average daily trading volume of 200,000 shares (measured over the three calendar months). There is no market capitalization requirement.
The Nasdaq 100 Index is constructed on a modified capitalization methodology. This modified method uses individual weights of included items according to their market capitalization.
Weighting allows constraints to limit the influence of the largest companies and balance the index with all members. To accomplish this, Nasdaq reviews the composition of the index each quarter and adjusts the weightings if the distribution requirements are not met.