Lombok. The Indonesia Stock Exchange (IDX) will exclude stocks with highly concentrated ownership from the Jakarta Composite Index (JCI) starting Monday, Nov. 2, as part of sweeping market reforms aimed at addressing transparency concerns raised by global index provider MSCI.

IDX President Director Jeffrey Hendrik said Saturday that the exchange would adjust the index's composition without changing its closing reference level from Friday, Oct. 30, ensuring that the removal of affected stocks does not automatically trigger a decline in the benchmark.

"There will be no change to the base. We will continue using the last closing level as our reference," Jeffrey said in Lombok, West Nusa Tenggara.

The JCI closed at 5,057.05 points on Friday, according to market data.

Under the revised methodology, the weighting previously assigned to stocks classified as having high shareholding concentration (HSC) will be redistributed among the remaining eligible constituents.

Jeffrey said the adjustment would follow a methodology similar to that used when a listed company is removed from an index following a delisting.

"For example, when a company is delisted, its weighting in the JCI is redistributed among the remaining stocks," he explained.

He illustrated the change by saying that the index's previous closing level, calculated using 962 stocks, would serve as the reference for a revised index comprising 882 stocks when trading resumes Monday.

The adjustment means the excluded stocks will no longer influence movements in the JCI, although they will remain listed and available for trading on the exchange.

The decision follows heightened scrutiny of Indonesia's capital market after MSCI warned that the country's classification could be downgraded from emerging-market to standalone status.

Concerns over concentrated shareholdings, ownership transparency and potential distortions in stock prices have prompted the IDX to introduce measures intended to improve the credibility of its benchmark indices.

The exchange has identified stocks with high ownership concentration, where a relatively small group of shareholders controls a substantial proportion of a company's shares.

By excluding those stocks from the JCI calculation, the IDX aims to reduce the influence of potentially distorted price movements on the benchmark.

The change will also alter the relative influence of the remaining constituents, whose combined weights will account for the full index calculation.

Jeffrey stressed that the adjustment would preserve continuity in the index level rather than treating the removal of stocks as a loss in market value.

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