Jakarta. Indonesian market authorities have urged Morgan Stanley Capital International (MSCI) to apply any changes to its free-float methodology uniformly across markets and avoid disadvantaging Indonesia, as the global index provider reviews how it measures investable shares for Indonesian stocks.

The Indonesia Stock Exchange (IDX) said the talks were aimed at conveying feedback from domestic market participants as MSCI reviews its methodology for determining the portion of shares available for public trading. Any tightening of the calculation could lower index weightings or trigger exclusions for some Indonesian companies, potentially weighing on foreign inflows.

“The discussion was constructive, but we respect that MSCI remains an independent index provider,” IDX Development Director Jeffrey Hendrik said on Thursday.

During the meeting, IDX, the Financial Services Authority (OJK), and the Indonesian Central Securities Depository (KSEI) highlighted two key points. First, they urged that any new methodology be applied universally and not discriminate against specific markets, including Indonesia. Second, they opened discussions on MSCI’s concerns over the quality and coverage of free-float data for Indonesian issuers.

Jeffrey said Indonesia’s capital market applies relatively strict free-float standards compared with many global exchanges. In Indonesia, shareholdings above 5% by a single party are excluded from free float, a threshold that is tighter than in many markets. Similar rules apply only in a few exchanges, such as the London Stock Exchange and the Stock Exchange of Thailand, while several Asian markets still use a 10% threshold.

MSCI launched a public consultation in late Oct. 2025 on a proposal to use share ownership data from the KSEI as an additional reference in calculating free float for Indonesian stocks.

Currently, listed companies are required to disclose shareholders with ownership above 5% to the IDX. KSEI data, however, classify shareholdings by investor category, offering a more detailed picture of ownership below the 5% threshold.

Under the proposal, MSCI would calculate a company’s free float using several different methods and then apply the most conservative result. These include estimates based on company disclosures, as well as calculations using KSEI ownership data that exclude certain shareholdings — such as corporate and script holdings — from the portion considered freely tradable.

The proposal has not yet been implemented. MSCI’s public consultation remains open until Dec. 31, with the final decision and consultation outcome expected before Jan. 30, 2026. If approved, the new methodology would be applied in the May 2026 index rebalancing.

Previously, Capital Markets Supervisor at the Financial Services Authority (OJK) Inarno Djajadi said ongoing communication with MSCI aims to ensure that Indonesia’s market conditions and policies are fully understood as global index providers adjust their index constituents.

“OJK, alongside the IDX and KSEI, continues to engage with global index providers on methodology and domestic market dynamics, while upholding transparency, governance and investor protection principles” said Inarno.

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