MSCI Weighs Index Shakeup Targeting Non-Operating Companies

The proposed rules mark a pivot from MSCI’s previous attempt to isolate companies based solely on digital asset holdings. After facing criticism that a crypto-specific threshold was arbitrary, the firm now intends to apply a broader, industry-agnostic framework. Under the current simulation, companies must pass a two-stage test: first, ensuring operating assets exceed 50% of total assets, and second, meeting a series of financial ratio tests regarding cash flow, expenses, and financing reliance. An issuer is flagged as a non-operating entity if it triggers at least four of the five defined failure points.

For existing index constituents, the process includes a buffer: firms must fail two consecutive annual reviews before being dropped. Using data from May 2026, the simulation identified Strategy, Metaplanet, and Yellow Cake as targets for exclusion, while companies like SharpLink would be placed on a watchlist. Investors are watching the situation closely, as removal from these benchmarks often forces passive funds to divest, potentially creating significant selling pressure. However, MSCI has not provided specific estimates on potential outflows, and the proposal remains open for market feedback until September 30. A final decision is expected by October 16, with any changes potentially taking effect during the November 2026 Index Review.