Indonesia Completes Stock Market Reform to Boost Investor Confidence

Indonesia has completed a series of stock market reforms designed to restore investor confidence and avert a potential downgrade by major index providers. The measures were finalized ahead of a self-imposed deadline linked to the May index review by MSCI, Southeast Asia’s largest economy’s primary index benchmark.

Hasan Fawzi, the chief capital market supervisor of the Financial Services Authority (OJK), announced the completion of these reforms on April 2, 2026. As part of the immediate implementation, authorities scheduled the publication of a list of stocks characterized by high shareholder concentrations following the market close on April 2, 2026.

Response to Market Volatility

The regulatory push follows a period of significant instability for the Jakarta Stock Exchange (IDX). In late January, the index provider MSCI warned that Indonesia was at risk of being downgraded. The warning centered on a lack of transparency regarding stock ownership and trading practices.

This warning triggered mass equity selloffs that resulted in the erasure of approximately $120 billion in market value. The Indonesian stock index has declined by more than 17% so far in 2026, positioning it as one of the worst-performing markets in Asia. Market pressures have been further compounded by the ongoing war in the Middle East.

Key Reform Measures

The reforms pledged by the Indonesian government focus on increasing transparency and enhancing market liquidity. A central component of these changes is the requirement for listed companies to increase their minimum free float—the portion of shares that are available for public trading. The minimum free float requirement has been doubled to 15%.

Authorities stated that this increase in tradeable shares is intended to prevent the manipulation of stock prices and ensure higher levels of liquidity within the market. To facilitate this transition, the Indonesia stock exchange issued implementing regulations during the week ending April 4, 2026, granting firms a period of up to three years to achieve compliance with the new free float standards.

In addition to the free float requirements, the government has committed to releasing more detailed shareholder data to address the transparency concerns raised by MSCI.

Enforcement and Future Outlook

The Financial Services Authority has indicated that the completion of these structural reforms will be accompanied by stricter enforcement against market misconduct. The agency aims to use these actions to rebuild the trust of international and domestic investors.

We will continue firm actions against violations in the capital market, including stock movement manipulation, to restore trust

Hasan Fawzi, chief capital market supervisor of the Financial Services Authority (OJK)

The timing of these completions is critical as the market prepares for the MSCI May index review. The Indonesian government’s efforts are aimed at stabilizing the IDX and reversing the downward trend that has defined the first quarter of 2026.