MSCI Highlights Free Float, OJK Opens 5 Percent Share Ownership Data

JAKARTA - The Financial Services Authority (OJK) is preparing a major overhaul of issuer share ownership data following input from MSCI. Chairman of the Board of Commissioners of the OJK Mahendra Siregar said the adjustment includes the publication of the structure of share ownership above and below 5 percent, complete with investor categories.

"Whatever the response from MSCI, we will ensure that further adjustments are carried out until the final so that it is accepted as intended," Mahendra said in a statement to reporters at the BEI Jakarta Building, Thursday, January 29.

MSCI or Morgan Stanley Capital International is a global stock index provider that serves as a reference for global institutional investors. MSCI's assessment of a country's transparency, liquidity, and market access can affect foreign capital flows.

Mahendra explained that one of the adjustments that MSCI was studying was the exclusion of "corporate and others" category investors in the calculation of free float. Free float is the portion of shares that are actually in circulation in the public and freely tradable. If this portion is small or not really free to circulate in the public, the liquidity of the shares can be low and the price is more easily volatile.

In addition, OJK has also prepared additional information requested by MSCI, including data on share ownership below 5 percent, investor categories, and ownership structure. When asked whether data on ultimate beneficial owners or UBO (ultimate beneficial owner) would be provided, Mahendra answered briefly, "Yes."

This step was taken amid market concerns about the status of the Indonesian capital market. According to a Bloomberg report, Goldman Sachs - a global investment bank - downgraded Indonesia's stock market rating to underweight, which means it is considered less attractive than other markets. Goldman said MSCI's concerns about the aspect of investability could potentially trigger significant outflows if Indonesia's market status is downgraded.

Mahendra said the initial adjustment would be confirmed to MSCI early next week. OJK targets a large framework of improvements to be completed before March, while further adjustments will continue to be made until it meets international standards.