What is Free Float that is the Spotlight of MSCI until the JCI is Corrected by 8 Percent
YOGYAKARTA - In this article, what free float will be discussed, which is highlighted by global investors, until it triggers the Composite Stock Price Index (IHSG) to collapse 8 percent on Wednesday, January 28, 2026.
The JCI collapsed after there was pressure from Morgan Stanley Capital (MSCI) which temporarily froze the treatment of the index for Indonesian stocks in the MSCI Global Stock Indexes.
The MSCI decision was taken because there are still concerns among global investors about the transparency of the shareholding structure in Indonesia and the liquidity of free float, despite improvements in data from PT Bursa Efek Indonesia (BEI).
Responding to this, the Indonesian capital market regulator, the Financial Services Authority, will revise the free float rule to 15 percent, from the previous 7.5 percent. This policy will be implemented starting in February 2026.
"SRO (self-Regulatory Organization/BEI) will issue rules for a minimum free float of 15 percent which will be carried out in the near future and with good transparency," said Chairman of the Dean of the OJK Commissioner Mahendra Siregar at a press conference at the BEI Building, South Jakarta.
What is Free Float?According to the Corporate Finance Institute website, free float is the portion of a company's shares that are actively circulating and traded on the capital market.
Shares that fall into this category do not belong to majority shareholders, such as founders, management, or institutions that hold shares for the long term and do not plan to sell them in the near future.
Free float is one of the important indicators to assess the level of liquidity and volatility of a stock in the market.
Companies with a large free float are generally considered more transparent and have relatively stable price movements. Conversely, shares with a small free float tend to be riskier, although they still have the potential to provide short-term profits.
The higher the free float percentage, the easier it is to trade the stock. This condition allows investors to enter and exit the market more freely, as well as making the stock price more stable because it is not easily controlled by certain parties.
Thus, the magnitude of free float has an influence on the level of investment risk, trading strategies, to the overall market valuation.
Before the latest rules were implemented with a minimum limit of 15 percent, the Indonesia Stock Exchange (IDX) previously set a minimum free float provision of 7.5 percent so that shares remain listed on the exchange.
Shares with a free float of more than 40 percent are considered very liquid and usually have a large weight in the calculation of the stock index.
Currently, the ratio of floating shares in Indonesia is still in the range of 23 percent.
That's the explanation of what free float is. Get other interesting news updates by visiting the VOI.id page.