Why MSCI’s Request Matters for Indonesia’s Stock Market Credibility

By Kusnandar & Co. Attorneys At Law – Jakarta, Indonesia

 

The recent request by MSCI, one of the world’s most influential index providers, for greater transparency in Indonesia’s stock ownership data should not be viewed as a mere technical issue. Instead, it reflects a deeper concern about the credibility, governance, and reliability of Indonesia’s capital market in the eyes of global investors. MSCI’s call for the Financial Services Authority (OJK) to disclose beneficial ownership (ultimate beneficial owner/UBO) data, including holdings below five percent, is a clear signal that transparency has become a non-negotiable standard in today’s global financial ecosystem.

 

This issue gained prominence following a sharp decline in Indonesia’s stock market, which even triggered a temporary trading halt. Market participants linked the volatility to MSCI’s assessment of Indonesia’s free float quality and ownership transparency—two critical indicators used to evaluate market investability. When investors are unable to clearly identify who ultimately controls listed shares, uncertainty increases. For global institutional investors, such uncertainty often translates into higher risk premiums or even capital withdrawal.

 

In this context, OJK’s response—committing to provide beneficial ownership data to MSCI, starting with major index constituents such as the IDX100—deserves recognition. The move signals that Indonesian regulators are willing to align with international best practices rather than adopt a defensive stance. Transparency is no longer just about regulatory compliance; it is about maintaining credibility in an increasingly competitive global capital market.

 

However, the decision to open beneficial ownership data also comes with significant challenges. Beneficial ownership information is inherently sensitive, as it reveals control structures that are often deliberately complex. In many cases, layered ownership is not only a business strategy but also a means of protecting privacy and commercial interests. Therefore, OJK must strike a careful balance between meeting global transparency standards and safeguarding legitimate data protection concerns. Transparency should strengthen trust, not create new vulnerabilities.

 

Beyond the immediate issue, MSCI’s request exposes a broader structural question: how mature is Indonesia’s capital market governance framework? While regulations on free float and disclosure already exist, MSCI’s concerns suggest that the available data may not sufficiently reflect the true ownership landscape. This highlights a gap not in regulation alone, but in data quality, consistency, and accessibility—factors that increasingly define a market’s standing at the international level.

 

The discussion around raising the minimum free float requirement to 15 percent further reinforces this point. If implemented effectively, such a policy could improve market liquidity, reduce price manipulation risks, and enhance overall market resilience. More importantly, it would signal that Indonesia is moving beyond symbolic reforms toward substantive improvements in market structure. For long-term investors, this kind of reform matters far more than short-term market fluctuations.

 

At the same time, the strong market reaction to MSCI’s assessment serves as a reminder of how interconnected Indonesia’s capital market is with global perceptions. MSCI’s influence is significant; its evaluations can affect portfolio allocations worth billions of dollars. Speculation about a potential downgrade in market classification—even if unlikely—illustrates how governance issues can quickly escalate into reputational risks if not addressed decisively.

 

Ultimately, OJK’s willingness to engage with MSCI on beneficial ownership transparency should be seen as a strategic opportunity. By improving disclosure standards and data integrity, Indonesia can strengthen investor confidence, reduce volatility driven by uncertainty, and enhance its position within global capital flows. The challenge lies in execution: transparency must be implemented carefully, consistently, and credibly. If done right, this moment could mark a meaningful step forward in Indonesia’s journey toward a more trusted and globally competitive capital market.

By : K&Co - January 30, 2026