MSCI Inc., a global provider of decision support tools and services for the investment community, has announced the outcomes of its 2025 Market Classification Review. The annual review evaluates the accessibility and investability of global equity markets, with key updates concerning Bulgaria, Korea, Greece, and Bangladesh.
Raman Aylur Subramanian, Head of Index R&D at MSCI, stated, “MSCI is committed to ensuring that our market classifications reflect the evolving realities of global accessibility and investability. 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.”
For Bulgaria, MSCI will maintain its classification as a Standalone Market, extending the consultation period for a potential reclassification to Frontier Market status. A decision is anticipated in the MSCI 2026 Market Classification Review. International institutional investors have cited concerns regarding limited market liquidity, insufficient market information, and underdeveloped trading and post-trading infrastructure. The timing of Bulgaria’s Eurozone accession and Euro adoption are also considered crucial factors for potential reclassification, aiming to prevent operational challenges. MSCI is accepting feedback on this matter until March 31, 2026.
Regarding Korea, MSCI continues to monitor the implementation and market adoption of measures designed to enhance the accessibility of its equity market. From 2008 to 2014, MSCI consulted with market participants on Korea’s potential reclassification from Emerging Market to Developed Market status. Key barriers identified at that time included limited convertibility of the Korean Won in the offshore currency market, rigidity of the ID system for in-kind transfers and off-exchange transactions, and restrictions on the use of exchange data for financial product creation.
Recent reforms by Korean authorities, including the Ministry of Economy and Finance’s 2023 announcement and the Financial Services Commission’s 2023 measures, have introduced changes such as granting Registered Foreign Institutions (RFIs) access to the onshore interbank forex market from January 2024 and extending trading hours in the second half of 2024. The Investor Registration Certificate (IRC) was replaced by Legal Entity Identifiers (LEIs) by December 2023, alongside relaxed reporting requirements for omnibus accounts and expanded eligibility for ex post reporting of over-the-counter (OTC) transactions.
However, investors continue to assess the sufficiency of these measures, particularly regarding the foreign exchange market, where Developed Markets typically feature fully convertible currencies with active, unconstrained offshore and onshore FX markets. Operational challenges in the LEI registration process persist, and the impact of omnibus and OTC measures remains limited due to their infrequent use. While authorities have worked to make selective investment instruments available, the expectation remains for unrestricted access to derivatives and other tools. The full prohibition on short selling, reintroduced in November 2023, was lifted on March 31, 2025. Despite this, investor concerns regarding compliance burden and the risk of abrupt regulatory shifts remain. MSCI will continue to seek feedback to evaluate the effectiveness of these reforms against Developed Market practices.
Greece’s market classification status has seen continuous improvements and reforms. The 2025 Market Accessibility Review recognized enhancements in Clearing and Settlement, Stock Lending, and Short Selling criteria, aligning Greece with market accessibility standards observed in Developed Markets in Europe. Greece also meets the economic development criteria for Developed Markets. However, Greece did not meet the newly introduced Size and Liquidity persistency requirements, which mandate a minimum of five companies to meet Developed Market Standard Index criteria over a sustained period for an upward reclassification. MSCI is seeking feedback from market participants on whether this persistency rule should be applied to European Markets, given that MSCI treats European countries classified as Developed Markets as a single entity for index construction, reflecting the high degree of integration across these equity markets.
For Bangladesh, floor prices have been removed for all but two securities, and previously low liquidity in the onshore FX market has reportedly been resolved. However, market participants emphasize that investability issues will continue until all floor prices are removed. MSCI will maintain the special treatment introduced in February 2023, which defers index review changes and the implementation of corporate events to mitigate concerns on index replicability. MSCI continues to welcome feedback on the accessibility of the Bangladesh market.
