Strategy, Metaplanet face possible removal from MSCI index under proposed eligibility rules

MSCI has proposed excluding Bitcoin (BTC) treasury firms Strategy and Metaplanet from its Global Investable Market Indexes (GIMI) under a new eligibility framework targeting firms it classifies as non-operating companies, according to a consultation document.

Strategy, Metaplanet among firms facing possible removal from MSCI index

The proposal would introduce additional quantitative screens to identify corporate issuers whose business operations are closer to investment vehicles than to traditional operating companies.

Strategy and Metaplanet are among three current constituents of the MSCI ACWI Investable Market Index (ACWI IMI) that would be excluded if the proposal is approved. The third company identified for potential exclusion is Yellow Cake, a UK-based firm.

MSCI noted that its proposed framework is designed to identify companies that create value primarily by accumulating and holding non-operating assets, generate limited cash from actual business operations and rely heavily on market movements or external capital to grow.

The proposed screening process would consist of two stages. The first is a Core Screen designed to determine whether a company has sufficient operating assets. Companies that fail the Core Screen would then be assessed under an Exclusion Screen based on five financial ratios.

These measures include operating asset intensity, expense intensity, cash flow, fair value intensity and capital dependence. Under the proposal, a company would be considered ineligible for inclusion if it triggers at least four of the five flags.

For current index constituents, MSCI has proposed less stringent thresholds and additional safeguards intended to reduce unnecessary index turnover. Companies already included in the index would need to fail the relevant screens for two consecutive annual filing periods before being removed.

The proposal would also create a public watchlist for companies that fail the screens based only on their latest filings but have not yet met the two-year requirement.

Ethereum (ETH) treasury firm SharpLink has been placed among this proposed watchlist, alongside Center Laboratories and Lydia Holding. MSCI noted that it could remove companies from the watchlist if they fail the screens again during the next annual review.

The potential changes stand as a major test for the affected companies because inclusion in major equity indexes can influence institutional investment and the funds that track those benchmarks.

MSCI emphasized that the consultation may or may not result in implementing the proposed changes. The index provider is seeking feedback from market participants through September 30.

Following the consultation period, MSCI expects to announce its decision on or before October 16. If the proposal is adopted, MSCI would implement the changes as part of the November Index Review.

MSCI’s latest consultation follows an earlier debate over how to treat Bitcoin-heavy treasury companies in major equity indexes. In November, the index provider considered whether Strategy and other digital asset treasuries should remain eligible for its benchmarks, a move that raised concerns about potentially significant passive fund outflows from these companies' stocks.