(FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.)
The year was 1984.
Ronald Reagan was US President. Prince and Michael Jackson played on the radio, and Ghostbusters and Gremlins played in theaters. Neon, big hair and aerobic outfits were the look. Apple introduced the first Macintosh computer.
And Russell Investments rebalanced its newly launched Russell 1000, Russell 2000, and Russell 3000 indexes for the first time.
The Russell US Indexes were rebalanced quarterly at first, and the first live reconstitution was in March 1984, according to Catherine Yoshimoto, Director of Product Management at FTSE Russell. She noted that the index rebalancing process was very different from today, as there was no preliminary announcement period, and new membership was based on quarter-end data, so the reconstitution occurred on the same day as rank day.
More than four decades later, the Russell Reconstitution is still going strong, and is even going back to the future in a sense.
The index rebalancing’s planned move from annual to semi-annual in 2026 is an acknowledgement of the scale and concentration of the day, which saw $217 billion trade across Nasdaq and NYSE on June 27, 2025.
“The size of the trade has consistently exceeded $100 billion since 2019,” Catherine Yoshimoto, Director of Product Management at FTSE Russell, told the Open Order Podcast, a Traders Magazine production. “There was feedback that concentrating all those changes in one event may pose one-day risk for index trackers. By moving to a semiannual reconstitution, we improve timeliness and representation while spreading out market impact.”
The Russell Recon updates the Russell 1000 and 2000 indexes to reflect changes in company size and market dynamics. With more than $10.6 trillion in assets benchmarked to these indexes, the process plays a central role in maintaining accurate representation of U.S. equities.
Yoshimoto noted that Russell rebalances moved from quarterly to semi-annual in 1987 and then annual in 1989. “That was found to be the balance strike — the right balance between representation and turnover,” Yoshimoto said.
Russell started considering a move back to semi-annual in 2019, based on client feedback, and after a comprehensive review, decided to make the change starting next year.
FTSE Russell, an LSEG business, published a timeline of enhancements to the Russell indexes and rebalances in a 2024 whitepaper.
Yoshimoto, who joined Russell Investments in 2010 and transitioned to FTSE Russell after the firm’s acquisition by the London Stock Exchange Group, emphasized that planning for the new cadence has been thoughtful and deliberate. FTSE Russell will conduct a full parallel test in November 2025 to ensure systems and participants are fully prepared.
June will remain the primary event, with the November reconstitution offering an additional touchpoint. “It’s not just about changing index members,” she said. “It’s about doing so in a way that supports market structure and transparency.”
While the mechanics may shift, Yoshimoto believes the reconstitution will remain a key fixture. “We view it as a cornerstone of the U.S. equity markets,” she said. “The change allows us to better reflect underlying market dynamics and continue to serve the evolving needs of our clients.”
