OJK Pledges Market Reforms After MSCI Freezes Indonesia Index Changes

JAKARTA, Investortrust.id — Financial Services Autority, or OJK, responds to MSCI’s decision to freeze index-related changes for Indonesian securities on Wednesday, Jan 28, 2026 in Jakarta by pledging accelerated reforms on free float rules, ownership transparency, and market governance to protect Indonesia’s standing in global equity benchmarks. The move follows MSCI’s warning that insufficient progress by May could trigger a weighting cut or even a downgrade of Indonesia’s market classification.

OJK Chairman Mahendra Siregar said the regulator viewed MSCI’s announcement as constructive input rather than rejection. “We received the explanation from MSCI as good input, because we see that the institution still wants to include shares of Indonesian issuers in global indexes,” he said.

He added that MSCI’s continued engagement signaled confidence in Indonesia’s long-term potential. “This shows that Indonesia’s capital market is very potential and investable for international investors,” Siregar said.

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Siregar said regulators had already submitted proposals and technical adjustments prepared by the Indonesia Stock Exchange and the Indonesian Central Securities Depository. These measures were published and were currently under MSCI’s review.

The key adjustment involved refining free-float calculations by excluding certain investor categories and disclosing ownership above and below the 5 percent threshold by investor type. “The objective is to ensure free float is assessed in a way that meets MSCI’s requirements,” he said.

Siregar stressed that Indonesia would move forward regardless of MSCI’s immediate response. “Whatever MSCI’s response, we will ensure further adjustments, if needed, are implemented until they are fully accepted in line with MSCI’s intent,” he said.

Beyond free float methodology, OJK committed to providing additional disclosures requested by MSCI, including more detailed information on shareholders owning less than 5 percent. “This will include investor categories and ownership structures, and we are committed to doing this in accordance with international best practices,” Siregar said.

As part of structural reform, self-regulatory organizations will soon issue new rules requiring a minimum free float of 15 percent for listed companies. Siregar said the rule would be implemented with strong transparency standards.

For companies unable to meet the requirement within a specified timeframe, OJK would enforce an exit policy through a structured supervisory process. “This will be done under proper oversight,” he said.

Siregar also revealed that the government was preparing regulations on stock exchange demutualization, which he said were expected to be issued in the first quarter of this year. He described the step as part of a broader effort to strengthen governance and integrity across the capital market.

“These measures reflect our commitment to better governance, higher integrity, and greater transparency,” he said. “We will directly oversee this entire process to ensure it runs effectively and on time.”

MSCI said in its announcement late Tuesday that it had concluded consultations on Indonesia’s free-float assessment but found persistent investor concerns. While some market participants supported using KSEI’s monthly shareholder data as a reference, many questioned the reliability of shareholder categorization.

MSCI said fundamental investability issues remained due to opaque ownership structures and concerns over coordinated trading that undermined price formation. It said more granular and reliable ownership data, including monitoring of high shareholding concentration, would be required.

Effective immediately, MSCI froze all increases to Foreign Inclusion Factors and number of shares, halted new additions to its Investable Market Indexes, and blocked upward migration across size segments. The measures will apply to upcoming index reviews, including February 2026. FIF is a multiplier MSCI uses to determine how much of a company’s market cap is considered investable by foreign investors. It is based on free float and foreign ownership limits.

MSCI warned that if transparency improvements were insufficient by May, it could reduce Indonesia’s weight in MSCI Emerging Markets indexes or reclassify the country to Frontier Market status following market consultation.

Siregar said OJK was coordinating closely with all stakeholders to ensure reforms aligned with global standards. “We will continue refining regulations and implementation so that a shared understanding is achieved and international-equivalent standards are met properly,” he said.