Strategy Urges MSCI to Scrap Proposed Eligibility Test
Strategy founder Michael Saylor and CEO Phong Le have asked MSCI to withdraw its proposed eligibility test that would delete the Bitcoin treasury company from its global benchmarks. The proposal, which screens issuers on five financial ratios, is deemed 'discriminatory, arbitrary, and misguided' by Strategy.
The test flags companies with operating assets below half of total assets, measuring factors such as operating asset intensity, expenses, cash flow, fair-value swings, and dependence on external financing. Tripping four out of the five flags renders a company ineligible for inclusion in MSCI's Global Investable Market Indexes (GIMI).
The proposed test affects Strategy, which holds 87% of the float-adjusted market capitalization at stake across all six companies targeted by the screen. The Bitcoin treasury company argues that it does not meet two of the flags, expense and fair-value changes, as its Bitcoin operations are accounted for separately in operating expenses.
Strategy warns that the proposal would have no meaningful impact on its business but 'profoundly' harm MSCI's reputation as a neutral index provider. The company also points out that excluding crypto treasuries could drive significant outflows, with JPMorgan analysts estimating $2.8 billion in potential losses if other index providers follow suit.