MSCI Tumbles Following BlackRock Headlines


Shares of MSCI (NYSE:MSCI), the already beleaguered index provider, plunged into the close Monday on heavy volume and headlines from BlackRock (NYSE:BLK) may be behind MSCI's late-session slide.

Earlier this afternoon, The Wall Street Journal sent headlines over the wires detailing BlackRock's plans to slash fees on some of its ETFs and the company's intentions to introduce new ETFs to compete with Vanguard.

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BlackRock's iShares unit is the world's largest ETF issuer and Vanguard is the third-largest in the U.S. Traders may be speculating that BlackRock's plans to issue new ETFs aimed at retaking market share from Vanguard could include self-indexing plans. iShares previously filed self-indexing plans but has yet to issue an ETF based on one of its own indexes.

Self-indexing is the process by which an ETF provider such as iShares or Vanguard uses its own proprietary indexes rather than contracting out to a company such as MSCI or FTSE Group of the U.K. MSCI experienced a record-one day decline earlier this month when Vanguard announced it was dropping MSCI index on 22 of its ETFs including the popular Vanguard MSCI Emerging Markets ETF (NYSE:VWO).

"MSCI is the gold standard of global and international equity indexes the near-universal choice of professional investors. We plan to deepen our partnership with MSCI to help deliver the highest quality products and portfolio construction to our clients," said Mark Wiedman, global head of iShares, at the time in an email to the media.

MSCI and iShares currently enjoy an intimate relationship as the ETF sponsor uses MSCI indexes for all but one of its ETFs tracking individual developed markets. MSCI is also the index provider for the bulk of the iShares emeging markets suite, including both country-specific fund such as the iShares MSCI Brazil Index Fund (NYSE:EWZ), and multi-country funds such as the iShares MSCI Emerging Markets Index Fund (NYSE:EEM).

Shares of MSCI, a former unit of Morgan Stanley (NYSE:MS), closed lower by almost 1.4 percent today on volume that was nearly double the daily average.

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