Criticism on index providers:
The increasing influence of indices means that some critics argue that benchmark providers such as MSCI are too powerful, given that promotions or relegations can send or sap billions of dollars from a country’s stock market.
Response from Fernandez of MSCI:
“The concept that index companies are so powerful and influential ignores the fact that we are agents of our clients. The minute we go against the wishes of our clients, it will be the beginning of the end,” he said.
I'm wondering which of these two perspectives is closer to reality.
Is there anything in historical precedence for us to take Fernandez at his word?
- If so, then why are critics still dubious?
- If not, then what could MSCI do to appease such critics?