Jakarta. The Indonesia Stock Exchange (IDX) says it is strengthening discussions with MSCI after the global index provider raised concerns about free-float transparency, a move that unsettles investors and pushes the benchmark stock index sharply lower at Wednesday’s opening.

IDX, together with the Financial Services Authority (OJK) and Kustodian Sentral Efek Indonesia (KSEI), Indonesia’s central securities depository, is continuing discussions with MSCI following the firm’s announcement late Tuesday on its assessment of Indonesian equities.

“Following MSCI’s announcement this morning, OJK, IDX, and KSEI will continue discussions with MSCI,” IDX Corporate Secretary Kautsar Primadi Nurahmad said in a text message on Wednesday. He added that the exchange has improved disclosure by publishing free-float data on its website and remains open to further discussions to align with MSCI’s transparency proposals.

Indonesia’s benchmark Jakarta Composite Index (JCI) opened sharply lower, plunging 587 points, or 6.99%, to 8,393 in early trading.

The market reaction followed MSCI’s conclusion of its global consultation on free-float assessments for Indonesian securities. While some international investors supported using KSEI’s Monthly Holding Composition Report as an additional reference, MSCI said many participants raised concerns over the reliability of shareholder classification and limited visibility into ultimate ownership structures.

MSCI said that despite minor enhancements to IDX’s free-float data feed, fundamental investability concerns persist, including the risk of coordinated trading behavior that could undermine proper price formation and increase volatility.

To address these issues, MSCI called for more transparent and reliable ownership data, potentially including monitoring of excessively concentrated shareholdings, to support a more robust assessment of free float and investability across Indonesian equities.

In response to those concerns, MSCI said it will apply an interim freeze on several index-related changes for Indonesian securities, effective immediately and covering index reviews such as the February 2026 rebalancing.

The measures include freezing all increases to Foreign Inclusion Factors (FIF) and Number of Shares (NOS), halting additions to MSCI Investable Market Indexes (IMI), and blocking upward size-segment migrations, including promotions from Small Cap to Standard indexes.

MSCI said the temporary treatment is intended to reduce index turnover and investability risks while allowing time for Indonesian market authorities to deliver “meaningful transparency improvements.”

MSCI warned that if insufficient progress is made by May 2026, it will reassess Indonesia’s market accessibility status. Subject to further consultation, this could lead to a reduction in Indonesia’s weighting in MSCI Emerging Markets indexes or a potential reclassification from Emerging Market to Frontier Market status.

"MSCI will continue to monitor developments in the Indonesian market and engage with market participants and authorities, including the OJK and IDX. MSCI will communicate further actions as warranted," it stated.

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