MSCI to drop Strategy from global indexes

MSCI will remove Strategy Inc from its global indexes, including the MSCI USA Index, effective after the market close on November 30. The change was confirmed in MSCI’s November index review, which listed the company’s security among the deletions. Index trackers now have until the November 30 rebalance to adjust their holdings to reflect the new composition of the benchmarks. The move affects Strategy’s role in widely followed global and U.S. equity indexes that are tracked by large passive investment funds.

The final review for the MSCI USA Index listed “STRATEGY A” among 24 deletions and one addition to the benchmark. For the MSCI USA Index, the review used an October 20 price cutoff and allows for certain corporate event updates before implementation. Strategy will leave the MSCI USA Index specifically at the November 30 close, aligning the domestic benchmark change with the broader global index removals.

The deletions are being carried out under MSCI’s new non‑operating company rule, which was finalised in mid‑October. This rule assesses a company by first looking at its operating assets and then testing it against five financial ratios. Companies that fail at least four of the five ratios can be ruled ineligible for inclusion in the Global Investable Market Indexes. Existing index members normally must fail across two annual reporting periods before removal, but Strategy went straight onto the deletion list, indicating it had already exhausted that buffer.

MSCI previously proposed excluding digital asset treasury companies whose holdings account for 50% or more of their total assets, describing such firms as having fund‑type characteristics that are excluded from its benchmarks. A broader review of “non‑operating companies” followed, leading to an asset‑neutral test introduced in August. A simulation using May data reportedly identified Strategy and other asset‑heavy firms, including Japan’s Metaplanet and uranium holder Yellow Cake, as deletions under the new framework.

Analysts have estimated about $2.8 billion of passive selling linked to MSCI‑tracking funds.

Strategy has argued that the impact of the index changes will be modest. The company says index trackers hold about 13 million of its shares, representing roughly 3.1% of its basic shares outstanding and less than a typical day’s trading volume in the stock. Strategy has 850,364 bitcoin on its balance sheet as of November 8, underscoring its role as a significant corporate holder of the cryptocurrency and contributing to its classification under the new rule.

Strategy shares fell 0.8% in extended trading on Wednesday following confirmation of the index removal. The stock has declined about 20% so far this year, while bitcoin prices are down about 15% over the same period. On November 11, Strategy’s shares closed at $122.35 during regular trading, a price that does not reflect post‑announcement trading because the MSCI review was scheduled for release after the close.

Strategy, described as the largest corporate holder of bitcoin and a bitcoin treasury and enterprise‑software company, has faced increasing scrutiny as MSCI tightened rules around non‑operating companies. Executive chairman Michael Saylor has called the new rule discriminatory toward digital‑asset treasury companies and maintains that Strategy operates a genuine software business. MSCI’s decision to treat the company as more akin to an investment fund than an operating firm marks the first application of the new non‑operating company rule to an existing index constituent.