Business Wire India

MSCI Inc. (NYSE: MSCI), a leading provider of critical decision support tools and services for the global investment community, announced today the results of the MSCI 2025 Market Classification Review.

Select highlights of this year’s review includes MSCI:

• Extending the consultation on a potential reclassification of Bulgaria from Standalone to Frontier Market status
• Continuing to monitor the implementation and market adoption of measures to enhance the accessibility of the Korean equity market, to determine whether these measures have replicated the outcomes of fully operational offshore FX markets such as those found in Developed Markets
• Providing updates on the market classification status of Greece
• Continuing to monitor the market accessibility of the Bangladesh equity market

“MSCI is committed to ensuring that our market classifications reflect the evolving realities of global accessibility and investability,” said Raman Aylur Subramanian, Head of Index R&D. “In 2025, we have seen both progress and persistent challenges across markets, underscoring the importance of transparent, rules-based frameworks to guide our classification assessments. Our annual review continues to serve as a critical tool for dialogue with market participants and supporting greater transparency in capital markets worldwide.”

More information related to the MSCI 2025 Market Classification Review, including the results of the 2025 MSCI Global Market Accessibility Review, can be viewed at: www.msci.com/market-classification.

Extension of the consultation on potential reclassification of Bulgaria to Frontier Market status

MSCI will maintain Bulgaria’s classification as a Standalone Market and will extend its review for a potential reclassification to Frontier Markets status, with a decision to be announced in the MSCI 2026 Market Classification Review.

International institutional investors cited limited market liquidity, insufficient market information, and underdeveloped trading and post-trading infrastructure as accessibility issues in the market.

Additionally, the timing of Bulgaria’s Eurozone accession and Euro adoption were noted as key factors in determining the appropriate timing for a potential reclassification of Bulgaria to prevent any potential operational challenges.

MSCI continues to welcome feedback on this topic until March 31, 2026 and will announce its decision as part of the MSCI 2026 Market Classification Review.

Korea’s Market Accessibility

From 2008 to 2014, MSCI consulted with global market participants on the potential reclassification of Korea from Emerging Market status to Developed Market status. Market participants identified the limited convertibility of the Korean Won in the offshore currency market as a key barrier to its reclassification to Developed Market status. At that time, other key accessibility issues highlighted were the rigidity of the ID system that made in-kind transfers and off-exchange transactions onerous; and the lack of investment instruments availability due to the restrictions on the use of exchange data for the creation of financial products.

Recently, Korean authorities implemented some measures aimed at improving the accessibility of the Korean equity market.

• Foreign exchange market: A fully functioning global investment process, suitable for all types of global investors in Developed Markets, needs FX markets characterized by fully convertible currencies, the absence of capital controls, and the existence of unconstrained, deep and liquid onshore and offshore markets that enable tight bid-ask spreads and ensure best execution. Importantly, such liquidity should be sufficient to support large, time-sensitive transactions, particularly at the time of an index rebalancing when trading volumes spike. Developed FX markets also feature broad participation from global investors, real-time price transparency, reliable and efficient settlement systems, and access to a wide range of hedging instruments. It remains to be seen whether Korea’s limited reforms, such as extended market hours, which do not reflect the current practices of any Developed Markets, will be sufficient to enable a fully developed FX market.
  
  Following the Ministry of Economy and Finance’s 2023 announcement, Korea implemented several FX market reforms. These include granting Registered Foreign Institutions (RFIs) access to the onshore interbank forex market from January 2024 and extending trading hours in the second half of the year. Despite these reforms, investors believe it remains critical to assess whether the implemented measures are sufficient, given that Developed Markets typically feature fully convertible currencies with active, unconstrained offshore and onshore FX markets. MSCI will continue to actively seek feedback from market participants to evaluate the effectiveness and comparability of Korea's FX reforms against the execution practices observed in other highly traded currencies within Developed Markets.

• Legal Entity Identifiers: As part of the Financial Services Commission’s 2023 reforms to improve foreign investor access, the Investor Registration Certificate (IRC) was replaced by Legal Entity Identifiers (LEIs); reporting requirements for foreign securities firms using omnibus accounts were relaxed; and the scope of foreign investors’ over-the-counter (OTC) transactions eligible for ex post reporting was expanded. These measures took effect by end-December 2023. However, operational challenges in the registration process persist. Moreover, the impact of measures related to omnibus accounts and OTC transactions remains limited, as these mechanisms are not yet widely used.

• Availability of Investment Instruments: International investors increasingly rely on a broad range of instruments such as ETFs, futures, options, swaps, and structured products to support their global investment process with strategies like market exposure, hedging, and equitization. These tools are essential for efficient global capital deployment. Though market authorities have been working with some participants to make selective instruments available in the market, the expectation remains for an open investment environment where access to derivatives and other instruments is unrestricted, in alignment with investor needs and global Developed Market practices.

Additionally, the full prohibition on short selling, reintroduced in November 2023, was lifted on March 31, 2025. Korea had previously implemented a market-wide ban in March 2020, which was partially lifted in May 2021. Regulatory and technical enhancements were accompanied by the recent removal of the ban to reinforce oversight of unfair trading practices, including illegal short selling. While market activity has recovered, investor concerns remain regarding the operational burden of compliance and the risk of abrupt regulatory shifts. MSCI will continue to monitor developments to assess market stability and consistency of the regulatory framework over time.

As a reminder, potential reclassification consultations require that all issues have been addressed, reforms have been fully implemented, and market participants have had ample time to thoroughly evaluate the effectiveness of the changes.

Market Classification Status of Greece

Following continuous improvements and reforms by the Greek markets authorities that have been assimilated and tested by market participants, improvements for the Clearing and Settlement, Stock Lending, and Short Selling criteria were recognized as part of the 2025 Market Accessibility Review. The Greek market has made progress in aligning with the market accessibility standards commonly observed in Developed Markets in Europe. Additionally, Greece meets the economic development criteria for Developed Markets.

Following the enhancements implemented to the Size and Liquidity Requirements of the MSCI Market Classification Framework, a persistency rule was introduced requiring a minimum number of five companies to meet Developed Market Standard Index criteria over a sustained period for an upward reclassification. Greece did not meet the newly introduced Size and Liquidity persistency requirements at the time of the MSCI 2025 Market Classification Review.

However, MSCI treats European countries classified as Developed Markets as a single entity for index construction and maintenance purposes. This approach reflects the high degree of integration observed across European equity markets, including harmonized market infrastructure, regulatory alignment, and cross-border accessibility. Moreover, it acknowledges the perspective of many global institutional investors, who increasingly view Developed Markets Europe as a cohesive and unified investment landscape. In line with this framework, MSCI is seeking feedback from market participants on whether the persistency rule under the standard Size and Liquidity Requirements should be applied to European Markets, such as Greece, when consulting for their potential reclassification to Developed Market status.

Market Accessibility of Bangladesh

Floor prices have been removed for all but two securities in the Bangladesh equity market. Additionally, market participants have reported that previously low liquidity in the onshore FX market has been resolved.

Market participants have strongly emphasized that investability issues will continue until all floor prices are removed. As such, MSCI will continue to apply the special treatment introduced in February 2023. This special treatment defers index review changes and the implementation of corporate events aiming to reduce the number of potential changes in the MSCI Bangladesh Indexes and mitigate concerns on index replicability.

MSCI continues to welcome feedback on the accessibility of the Bangladesh market and may consult with market participants in case of further developments.

-Ends-

About MSCI

MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process.

The process for submitting a formal index complaint can be found on the index regulation page of MSCI’s website at: https://www.msci.com/index-regulation.

This document and all of the information contained in it, including without limitation all text, data, graphs, charts (collectively, the “Information”) is the property of MSCI Inc. or its subsidiaries (collectively, “MSCI”), or MSCI’s licensors, direct or indirect suppliers or any third party involved in making or compiling any Information (collectively, with MSCI, the “Information Providers”) and is provided for informational purposes only. The Information may not be modified, reverse-engineered, reproduced or redisseminated in whole or in part without prior written permission from MSCI. All rights in the Information are reserved by MSCI and/or its Information Providers.

The Information may not be used to create derivative works or to verify or correct other data or information. For example (but without limitation), the Information may not be used to create indexes, databases, risk models, analytics, software, or in connection with the issuing, offering, sponsoring, managing or marketing of any securities, portfolios, financial products or other investment vehicles utilizing or based on, linked to, tracking or otherwise derived from the Information or any other MSCI data, information, products or services.

The user of the Information assumes the entire risk of any use it may make or permit to be made of the Information. NONE OF THE INFORMATION PROVIDERS MAKES ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE INFORMATION (OR THE RESULTS TO BE OBTAINED BY THE USE THEREOF), AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH INFORMATION PROVIDER EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF ORIGINALITY, ACCURACY, TIMELINESS, NON-INFRINGEMENT, COMPLETENESS, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE) WITH RESPECT TO ANY OF THE INFORMATION.

Without limiting any of the foregoing and to the maximum extent permitted by applicable law, in no event shall any Information Provider have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits) or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited, including without limitation (as applicable), any liability for death or personal injury to the extent that such injury results from the negligence or willful default of itself, its servants, agents or sub-contractors.

Information containing any historical information, data or analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Past performance does not guarantee future results.

The Information may include “Signals,” defined as quantitative attributes or the product of methods or formulas that describe or are derived from calculations using historical data. Neither these Signals nor any description of historical data are intended to provide investment advice or a recommendation to make (or refrain from making) any investment decision or asset allocation and should not be relied upon as such. Signals are inherently backward-looking because of their use of historical data, and they are not intended to predict the future. The relevance, correlations and accuracy of Signals frequently will change materially.

The Information should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. All Information is impersonal and not tailored to the needs of any person, entity or group of persons.

None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), any security, financial product or other investment vehicle or any trading strategy.

It is not possible to invest directly in an index. Exposure to an asset class or trading strategy or other category represented by an index is only available through third party investable instruments (if any) based on that index. MSCI does not issue, sponsor, endorse, market, offer, review or otherwise express any opinion regarding any fund, ETF, derivative or other security, investment, financial product or trading strategy that is based on, linked to or seeks to provide an investment return related to the performance of any MSCI index (collectively, “Index Linked Investments”). MSCI makes no assurance that any Index Linked Investments will accurately track index performance or provide positive investment returns. MSCI Inc. is not an investment adviser or fiduciary and MSCI makes no representation regarding the advisability of investing in any Index Linked Investments.

Index returns do not represent the results of actual trading of investible assets/securities. MSCI maintains and calculates indexes, but does not manage actual assets. The calculation of indexes and index returns may deviate from the stated methodology. Index returns do not reflect payment of any sales charges or fees an investor may pay to purchase the securities underlying the index or Index Linked Investments. The imposition of these fees and charges would cause the performance of an Index Linked Investment to be different than the MSCI index performance.

The Information may contain back tested data. Back-tested performance is not actual performance, but is hypothetical. There are frequently material differences between back tested performance results and actual results subsequently achieved by any investment strategy.

Constituents of MSCI equity indexes are listed companies, which are included in or excluded from the indexes according to the application of the relevant index methodologies. Accordingly, constituents in MSCI equity indexes may include MSCI Inc., clients of MSCI or suppliers to MSCI. Inclusion of a security within an MSCI index is not a recommendation by MSCI to buy, sell, or hold such security, nor is it considered to be investment advice.

Data and information produced by various affiliates of MSCI Inc., including MSCI ESG Research LLC and Barra LLC, may be used in calculating certain MSCI indexes. More information can be found in the relevant index methodologies on www.msci.com.

MSCI receives compensation in connection with licensing its indexes to third parties. MSCI Inc.’s revenue includes fees based on assets in Index Linked Investments. Information can be found in MSCI Inc.’s company filings on the Investor Relations section of msci.com.

MSCI ESG Research LLC is a Registered Investment Adviser under the Investment Advisers Act of 1940 and a subsidiary of MSCI Inc. Neither MSCI nor any of its products or services recommends, endorses, approves or otherwise expresses any opinion regarding any issuer, securities, financial products or instruments or trading strategies and MSCI’s products or services are not a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such, provided that applicable products or services from MSCI ESG Research may constitute investment advice. MSCI ESG Research materials, including materials utilized in any MSCI ESG Indexes or other products, have not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. MSCI ESG and climate ratings, research and data are produced by MSCI ESG Research LLC, a subsidiary of MSCI Inc. MSCI ESG Indexes, Analytics and Real Estate are products of MSCI Inc. that utilize information from MSCI ESG Research LLC. MSCI Indexes are administered by MSCI Limited (UK) and MSCI Deutschland GmbH.

Please note that the issuers mentioned in MSCI ESG Research materials sometimes have commercial relationships with MSCI ESG Research and/or MSCI Inc. (collectively, “MSCI”) and that these relationships create potential conflicts of interest. In some cases, the issuers or their affiliates purchase research or other products or services from one or more MSCI affiliates. In other cases, MSCI ESG Research rates financial products such as mutual funds or ETFs that are managed by MSCI’s clients or their affiliates, or are based on MSCI Inc. Indexes. In addition, constituents in MSCI Inc. equity indexes include companies that subscribe to MSCI products or services. In some cases, MSCI clients pay fees based in whole or part on the assets they manage. MSCI ESG Research has taken a number of steps to mitigate potential conflicts of interest and safeguard the integrity and independence of its research and ratings. More information about these conflict mitigation measures is available in our Form ADV, available at https://adviserinfo.sec.gov/firm/summary/169222.

Any use of or access to products, services or information of MSCI requires a license from MSCI. MSCI, Barra, RiskMetrics, IPD and other MSCI brands and product names are the trademarks, service marks, or registered trademarks of MSCI or its subsidiaries in the United States and other jurisdictions. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and S&P Dow Jones Indices. “Global Industry Classification Standard (GICS)” is a service mark of MSCI and S&P Dow Jones Indices.

MIFID2/MIFIR notice: MSCI ESG Research LLC does not distribute or act as an intermediary for financial instruments or structured deposits, nor does it deal on its own account, provide execution services for others or manage client accounts. No MSCI ESG Research product or service supports, promotes or is intended to support or promote any such activity. MSCI ESG Research is an independent provider of ESG data.

Privacy notice: For information about how MSCI collects and uses personal data, please refer to our Privacy Notice at https://www.msci.com/privacy-pledge.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250624533715/en/