Financial market index providers MSCI and FTSE Russell are to drop Russian equities from their widely-tracked indexes — and the London Stock Exchange is suspending dozens of Russian depositary receipts from trading.
MSCI said international institutional investors believe the Russian equity market is “currently uninvestable” and that Russian securities should be removed from the MSCI Emerging Markets Indexes.
FTSE Russell said its decision will be effective from March 7, while MSCI said its decision will be implemented in one step across all MSCI indexes at the March 9 market close.
MSCI also said it is reclassifying MSCI Russia Indexes from emerging markets to standalone markets status.
“MSCI announced today that the MSCI Russia Indexes will be reclassified from Emerging Markets to Standalone Markets status,” said MSCI.
“The reclassification decision will be implemented in one step across all MSCI Indexes, including standard, custom and derived indexes, at a price that is effectively zero and as of the close of March 9, 2022.
“On February 28, 2022, MSCI launched a consultation with international institutional investors on the accessibility and investability of the Russian equity market.
“During the consultation, MSCI received feedback from a large number of global market participants, including asset owners, asset managers, broker dealers, and exchanges with an overwhelming majority confirming that the Russian equity market is currently uninvestable and that Russian securities should be removed from the MSCI Emerging Markets Indexes.
“Consultation participants highlighted several recent negative developments that led to a material deterioration in the accessibility of the Russian equity market to international institutional investors, to such an extent that it does not meet the Market Accessibility requirements for Emerging Markets classification as per the MSCI Market Classification Framework.
“To assist investors in their planning for the implementation of the reclassification decision, MSCI already calculates more than 100 global and regional indexes that exclude Russia, for example, MSCI Emerging Markets ex Russia, MSCI ACWI ex Russia, MSCI EM EMEA ex Russia, MSCI EM Eastern Europe ex Russia, etc.
“The full list of MSCI ex Russia Indexes is available on request.
“MSCI will continue to monitor market developments and may issue additional guidance or announce further changes relevant to specific indexes, if necessary.
“MSCI reminds users of its indexes for any purpose, including both indexed and active management, that they are responsible for ensuring compliance with all applicable sanctions and any other rules, regulations, prohibitions, laws and other restrictions applicable to their portfolios, trading and other investment activity.”