IDX "Clean-Up" of Indices! What Has Changed?
The Indonesia Stock Exchange (IDX) has officially released Announcement Number Peng-00065/IDX.POP/04-2026, which regulates the adjustment of evaluation criteria for the IDX30, LQ45, and IDX80 indices.
The policy, signed on 21 April 2026 by the Head of the Trading Regulation and Operations Division, Pande Made Kusuma Ari A., and Acting Head of the Research Division, Heidy Ruswita Sari, was issued to respond to the need for indices to be more representative of current market dynamics.
The adjustment to these rules is scheduled to be implemented in the major April 2026 evaluation and will take effect on the first trading day in May 2026.
Integration of High Shareholding Concentration (HSC) Criteria
In the update to the index selection universe criteria, the exchange authority has established a crucial new requirement: stocks must not fall into the High Shareholding Concentration (HSC) category.
The exchange’s step to exclude issuers with excessively concentrated ownership is a form of fundamental harmonisation with global capital market operational standards.
Historically, HSC-status stocks have the potential to trigger price volatility anomalies due to the limited supply of freely circulating shares in the regular market. By applying this criterion, the IDX aims to eliminate valuation distortions so that the movement of major indices truly reflects organic market liquidity and demand conditions.
Update to Free Float Ratio and Liquidity Relaxation
In addition to the HSC aspect, the IDX has adjusted the reference limits for the public share ownership ratio or free float. The selection criteria for the IDX80 index universe, drawn from the top 150 stocks by trading value in the regular market over the last 12 months and JCI constituent stocks listed for more than six months, now require a minimum free float ratio of 10%.
However, this provision also requires compliance with the limits set in Regulation Number I-A as of 31 March 2026 and Circular Letter Number SE-00004/IDX/03-2026, where the exchange will use the higher percentage limit between the two.
Interestingly, the exchange authority has also provided specific relaxation on trading transaction eligibility aspects. In previous rules, stocks entering the selection stage were required to have never been suspended and to be traded every day within the last six months.
Through this latest adjustment, that operational requirement has been relaxed to a maximum of one day without transactions within the six-month period.
This relaxation provides more realistic space for issuers with good fundamentals that may have temporarily experienced no crossing transactions (matching orders) on a single trading day.
Alignment of Governance with International Standards
Screening index constituents by considering public share availability limits has long been a prudence standard in various global exchanges.
Similar preventive measures are applied by the Tokyo Stock Exchange through its Prime Market classification, as well as by Hong Kong’s capital market authorities, which strictly monitor issuers with concentrated ownership to mitigate price manipulation.
Furthermore, this adjustment aligns domestic parameters with the methodologies of international index providers, such as MSCI, which are highly stringent in focusing on free-float adjusted market capitalisation.
Consequences for Institutional Portfolio Rotation
Strategically, this tightening of evaluation criteria will bring direct positive implications to the domestic capital market ecosystem. Ahead of the rule’s effectiveness in May 2026, significant portfolio rebalancing is projected by institutional investment managers using the IDX30 and LQ45 indices as underlying assets.
Although to date only two issuers monitored as still in HSC within these three reference indices—PT Barito Renewables Energy Tbk (BREN) and PT Dian Swastatika Sentosa Tbk (DSSA)—investors should remain vigilant as updates on HSC issuers will continue to be published over time.
Large-capitalisation issuers indicated as entering the HSC radar will be encouraged to promptly reorganise their ownership structures—such as through corporate actions—if they wish to maintain their positions in the reference indices.
Ultimately, the IDX’s more comprehensive screening instrument is believed to be able to mitigate potential sudden capital outflows, which often colour the market during global index adjustment periods.