Market index provider MSCI on Wednesday said it is collecting lower licensing fees from exchange-traded fund manager BlackRock on a series of new funds than it charges on older funds.
Fees on all of BlackRock's older ETFs that track MSCI indexes have not been changed, New York-based MSCI said in a release. BlackRock, also based in New York, is MSCI's largest customer and provided 11 percent of its total revenue last year.
With competition heating up in the U.S. ETF market, BlackRock on Monday announced a new "Core Series" of funds for its iShares family. The line-up comprised six existing ETFs with reduced fees and four new low-cost ETFs, including three tracking MSCI indexes. The new funds use benchmarks from MSCI's "All Country World Indexes - Investable Market Index," known as ACWI IMI.
"While MSCI's licensing fees for use of its ACWI IMI indices as the basis of the Core Series ETFs are lower than its current blended average licensing fee with iShares, the terms of MSCI's licenses with respect to existing ETFs were not amended," MSCI said in a statement.
Shares of MSCI jumped 6 percent on Tuesday after BlackRock's core series announcement. BlackRock cut its own ETF management fees less than analysts expected, thus putting less pressure on the firm to renegotiate the fees it pays to MSCI.
MSCI shares gained 24 cents, or 0.9 percent, to $27.44 on the New York Stock Exchange on Wednesday.
The shares have still not recovered from a 30 percent crash on October 2 when Vanguard Group said it was dumping MSCI indexes from 22 of its funds. MSCI shares closed on October 1 at $35.82.
Some $7 trillion of assets worldwide use MSCI indexes as benchmarks.
(Reporting by Aaron Pressman; Editing by Leslie Adler)