MSCI Tightens Index Eligibility Rules for Non-Operating Companies
MSCI announced revised eligibility standards for non-operating companies in its global indexes, effective after the close on Nov. 30. Strategy and Japan-based Metaplanet are among the entities that may be affected; the framework applies additional screens before exclusion.
MSCI Inc. (NYSE: MSCI ) announced on Thursday that it would tighten eligibility standards for “non-operating companies” in its global benchmark indexes, potentially excluding Bitcoin (CRYPTO: BTC) treasury companies such as Strategy Inc. (NASDAQ: MSTR ). Door Shut for Crypto Treasury Companies?
The updated framework, set to take effect after the close of Nov. 30, covers investment funds, business development companies and passive investment vehicles, which are already excluded, as well as similarly structured corporate issuers. MSCI said it would first screen companies for “substantial” operating assets. Those failing that review will undergo five financial-ratio tests and will be excluded if four or more ratios are flagged.
The index provider said it would also end interim measures for companies whose digital assets account for at least 50% of total assets, bringing those securities under the revised methodology. MSCI released a list of entities that may be affected after the change takes effect. Notably, this includes Strategy and Japan-based Metaplanet Inc. (OTC: MTPLF ) —the two biggest Bitcoin holders.
Read Also: Google’s Quantum Breakthrough Puts Bitcoin in Trouble? Analyst Says Not Today, but ‘Gap Is Getting Smaller’ Big Sell-Off Incoming or Immaterial Impact? Strategy has criticized and urged MSCI to withdraw the proposal, calling the non-operating company screen a "pretext" to exclude Bitcoin treasury companies. The firm’s core objection is that MSCI’s "operating" and "non-operating" classifications have no basis in accounting rules or any recognized legal framework.
CEO Phong Le has downplayed concerns about prolonged selling pressure if Strategy is dropped from MSCI global indexes, saying the move would have an "immaterial" impact on the firm. The firm currently holds 848,250 BTC, worth $69.50 billion, making it the world’s largest corporate holder of the apex cryptocurrency. It sits on unrealized gains of nearly $6 billion. Price Action: At the time of writing, BTC was exchanging hands at $82,068.06, up 1.10% in the last 24 hours, according to data Pro.
Strategy shares were down 2.91% in pre-market trading after closing 5.62% higher at $151.29 during Tuesday’s regular trading session. Edge Stock Rankings show MSTR has led on short- and medium-term price trends but trailed over the long term. See More: Top Growth Stocks Photo courtesy: Shutterstock