Jakarta. MSCI said it is assessing a new set of capital market transparency reforms rolled out by Indonesian authorities, while keeping curbs on local equities in place after earlier concerns triggered a sharp market sell-off.

The reforms, introduced by the Financial Services Authority (OJK), Indonesia Stock Exchange (IDX), and Indonesia Central Securities Depository (KSEI), include enhanced disclosure of shareholders owning more than 1%, more detailed investor classification, the introduction of a High Shareholding Concentration (HSC) framework, and a roadmap to raise the minimum free float requirement to 15%.

MSCI said it is evaluating the scope, consistency, and effectiveness of these measures, particularly for free float determination and broader investability assessments. The benchmark Jakarta Composite Index (JCI) fell by 0.7% on Tuesday's opening following the announcement.

MSCI said it will maintain existing restrictions in its May 2026 Index Review. These include freezing increases in Foreign Inclusion Factors and the number of shares, blocking new index inclusions, and halting any upward migration of Indonesian stocks across size segments.

MSCI added that it may delete securities identified under the HSC framework and selectively use the new 1% ownership disclosure data to refine free float estimates. However, it will not fully incorporate the new datasets into its methodology until its review is complete and market feedback has been assessed.

The firm said it will provide further updates in its Market Accessibility Review scheduled for June 2026, as investors watch whether Indonesia’s reforms can restore confidence and safeguard its standing in global equity benchmarks.

In effect, MSCI is telling Indonesia that reforms alone are not enough. Until the new rules translate into clearer ownership data and credible monitoring of share concentration, the market will remain under restrictions.

The review comes after a turbulent start to the year. The Jakarta Composite Index plunged 7% on Jan. 28, a day after MSCI warned it would freeze index treatment for Indonesian stocks following concerns over ownership transparency and market accessibility.

The decision followed the release of MSCI’s consultation findings on Jan. 27, which concluded that ownership data for Indonesian equities remained insufficiently transparent. The firm flagged unclear ownership structures, high ownership concentration, and risks of coordinated trading that could distort price formation.

As part of that stance, MSCI imposed a temporary freeze on all positive adjustments for Indonesian securities, including increases in Foreign Inclusion Factors and index weightings, new additions to its indexes, and upgrades across size segments.

It also warned that failure to improve transparency and establish a credible monitoring system for ownership concentration by May 2026 could lead to a reduction in Indonesia’s weight in the MSCI Emerging Markets Index — or even a downgrade to frontier market status.

Indonesian authorities moved quickly to respond. On Feb. 2, OJK outlined a reform package aimed at addressing MSCI’s concerns and restoring investor confidence after the sell-off.

OJK Acting Chairwoman Friderica Widyasari Dewi said the regulator would expand ownership disclosure from the current 5% threshold to above 1%, allowing both regulators and investors to better track shareholding structures.

“Ownership data that was previously disclosed only above the 5% level will now be visible from 1%,” Friderice, who has been appointed as a full-time chairwoman, said, adding the rule could be implemented as early as this year.

Authorities are also preparing to raise the minimum free float requirement to 15% from 7.5%, a move aimed at improving liquidity and aligning Indonesia more closely with global standards. The change could trigger corporate actions among companies with limited public ownership.

In addition, OJK is enhancing market data granularity, including transaction statistics and ownership classification. Kustodian Sentral Efek Indonesia plans to expand its investor classification system from nine to 27 subcategories to improve transparency around beneficial ownership.