MSCI Prepares Index Contingency Plans for Greek Euro Exit

MSCI Inc. and Standard & Poor’s announced contingency plans for calculating their equity indexes should Greece leave the euro currency union.

Greek shares may be excluded from benchmark gauges if the nation suffers a “major disorderly exit” that results in capital or currency controls or a prolonged closure of equity markets, according to MSCI, the developer of gauges such as the MSCI World Index of developed-market stocks. The New York-based company said today that it would take action only after an official communication from Greece that the nation is leaving.

S&P said it would temporarily stop calculating indexes for any country leaving the euro zone should that nation’s financial markets close. The indexes would resume once markets reopen, S&P said in a statement today on its website.

An inconclusive election on May 6 has stoked concern that Greece will be unable to form a government willing to implement austerity measures reached with the European Union as part of an international bailout. A new ballot is scheduled for June 17 and two polls released today showed that the anti-austerity Syriza party is likely to win second place, the same result it achieved in the first election.

“MSCI would communicate the final decisions on the treatment of Greece in the MSCI Indices as well as the final time line within five days following the official communication by the Greek authorities” that the nation was leaving the euro, the company said in the statement. “MSCI intends to reflect the new currency in the MSCI Indices as soon as the quotes denominated in this currency become available.”

A Greek exit wouldn’t automatically result in the exclusion of the nation’s stocks from developed-market indexes, MSCI said. The classification of a market is usually assessed as part of its annual review every June, the company said.

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