MSCI Adopts Index Exclusion Rules That Could Oust Strategy, Metaplanet and Upexi
Key Takeaways
- •MSCI confirmed Thursday it will adopt a methodology under which 'non-operating companies' become ineligible for inclusion in its Global Investable Market Indexes.
- •Strategy has been identified for deletion from the indexes, while Sharplink, Ton Strategy Company, Solana Company and DeFi Development Corp. are on a watchlist for potential removal.
- •The screening assesses operating assets and five financial ratios, requiring companies to fail at least four tests to be deemed ineligible, with existing constituents generally needing to fail across two annual reporting periods before removal.
- •MSCI will release the final list of companies slated for removal on Nov. 11, with the exclusions taking effect on Nov. 30, 2026.
- •JPMorgan analysts previously estimated Strategy's exclusion could trigger about $2.8 billion in selling, while Strategy has noted that index-tracking funds hold roughly 13 million of its shares, or 3.1% of its basic shares outstanding.
Index provider MSCI has adopted new rules that could lead to Strategy, Metaplanet and Upexi being removed from its global indexes, while several other crypto treasury companies — firms that hold digital assets on their balance sheets — face potential exclusion.
MSCI said Thursday that it will adopt a methodology proposed in August under which "non-operating companies" would become ineligible for inclusion in the MSCI Global Investable Market Indexes.
The index provider previously identified Strategy (MSTR) as one of the companies that would be deleted from the indexes under the "non-operating companies methodology." Sharplink, Inc (SBET), Ton Strategy Company (TONX), Solana Company (HSDT) and DeFi Development Corp. (DFDV) are among the firms that would be placed on a "watchlist" for potential removal.
Deletion from the indexes could force funds that track MSCI benchmarks to sell the affected companies' shares, potentially putting pressure on stock prices and reducing passive investment demand.
"It removes a company from the default portfolios of tens of millions of people who never chose to remove," said Conner Brown, executive director of the Bitcoin Policy Institute, in September, describing the consequences of broad-market index exclusion with Strategy as the example.
Under the new methodology, MSCI will assess companies based on their operating assets and five financial ratios, a screen aimed at distinguishing operating businesses from companies whose main function is holding assets. Companies that fail at least four of the five tests could be deemed ineligible. Existing index constituents must generally fail the screening process across two annual reporting periods before removal.
According to MSCI, the final list of companies slated for removal will be released on Nov. 11 — the next checkpoint for the affected companies — and will take effect on Nov. 30, 2026.
JPMorgan analysts previously estimated that Strategy's exclusion from MSCI indexes could trigger roughly $2.8 billion in selling, though that estimate related to MSCI's earlier digital asset proposal rather than the rules adopted Thursday.
In August, Strategy opposed the proposed changes while also playing down the potential disruption. The company said funds tracking MSCI's Global Investable Market Indexes hold approximately 13 million of its shares, representing 3.1% of its basic shares outstanding, an amount the company said is equal to less than one day's trading volume.
