Monique Handa Shafira, Jakarta – Indonesia's financial regulator said it will raise the minimum public shareholding requirement for listed companies to 15%, up from 7.5%, as authorities move to address investor concerns flagged by MSCI over market transparency and investability.
The Financial Services Authority (OJK) said the Indonesia Stock Exchange (IDX) will issue the new rule in the near term. OJK Chairman Mahendra Siregar said the policy will be implemented with clear disclosure requirements for issuers, including a defined transition period to allow companies to adjust.
"Self-regulatory organizations will issue a rule setting a minimum free float of 15%," Mahendra said at the IDX building in Jakarta on Thursday. Companies that fail to meet the requirement within the stipulated timeframe will face an exit policy, he added.
The move follows MSCI's conclusion of a global consultation on free-float assessments for Indonesian equities. While some international investors supported the use of the central securities depository's monthly holdings report as an additional reference, MSCI said many respondents raised concerns about the reliability of shareholder classifications and limited visibility into ultimate ownership structures.
Mahendra said the OJK is committed to aligning Indonesia's disclosure regime with international best practices, including responding to MSCI's request for more granular ownership data. This could involve greater transparency around shareholdings below the 5% disclosure threshold, as well as clearer categorization of investor types and ownership structures.
"We are committed to implementing and ensuring compliance with international best practices," he said.
Markets were volatile following MSCI's announcement. The Jakarta Composite Index (JCI) fell 7% on Wednesday and extended its losses by a further 10% t0 7,482 on Thursday, triggering three trading halts over two days.
The JCI later rebounded to 8,125 after authorities outlined their response to MSCI's concerns.
In its assessment, MSCI said that despite minor improvements to the IDX's free-float data feed, fundamental investability risks remain. These include the potential for coordinated trading behavior that could impair price formation and amplify volatility. The index provider called for more transparent and reliable ownership data, including possible monitoring of excessively concentrated shareholdings, to support a more robust evaluation of free float and investability across Indonesian stocks.
As an interim measure, MSCI said it will freeze several index-related changes for Indonesian securities with immediate effect. The freeze covers upcoming index reviews, including the February 2026 rebalancing, and is intended to reduce index turnover and investability risks while giving market authorities time to deliver "meaningful transparency improvements."
MSCI warned that if progress is insufficient by May 2026, it will reassess Indonesia's market accessibility status. Subject to further consultation, that review could result in a reduction of Indonesia's weight in MSCI Emerging Markets indexes or, in a more severe scenario, a potential reclassification from Emerging Market to Frontier Market.