Index provider MSCI has finalized new rules excluding non-operating companies without substantive business operations from its Global Investable Market Indexes.
The change will take effect after the market close on November 30 and primarily targets crypto treasury companies whose balance sheets are overly dependent on a single digital asset. The final list of affected companies will be announced on November 11.
To prevent excessive volatility among index constituents, the rules establish a buffer mechanism: existing constituents will only be effectively removed if they fail to meet the criteria for two consecutive reporting periods.
Once removed from a flagship index, companies will face forced portfolio adjustments by passive funds tracking the index. Their ability to attract low-cost incremental capital through allocations in traditional stock market indexes is narrowing.
The change will take effect after the market close on November 30 and primarily targets crypto treasury companies whose balance sheets are overly dependent on a single digital asset. The final list of affected companies will be announced on November 11.
To prevent excessive volatility among index constituents, the rules establish a buffer mechanism: existing constituents will only be effectively removed if they fail to meet the criteria for two consecutive reporting periods.
Once removed from a flagship index, companies will face forced portfolio adjustments by passive funds tracking the index. Their ability to attract low-cost incremental capital through allocations in traditional stock market indexes is narrowing.