Indonesia is abolishing the rule that let a listed company's shares stop trading altogether, after MSCI threatened to demote the market to frontier status.

The Indonesia Stock Exchange will scrap its IDR50 minimum trading price, chief executive Jeffrey Hendrik said in a statement following talks with market participants and industry associations on August 19. The floor will drop to one rupiah, with system trials on August 22 and 29 and the change targeted to take effect on September 7, Nikkei Asia reported.

The floor was introduced more than a decade ago to shield retail investors from sharp falls. It did the opposite. A share that hits the minimum has no buyers below it and no sellers above it, so it simply stops moving: 111 of the roughly 900 members of the Jakarta Composite Index are currently trading at or below IDR50 ($0.0028), and Bloomberg reported on August 20 that the rule is uncommon among major markets, which use trading halts and circuit breakers instead.

The stock that made the case was GoTo Gojek Tokopedia (IDX: GOTO), the ride-hailing and food-delivery group, which has been stuck at exactly IDR50 since the start of May with volumes collapsing behind it. Asset managers complained to MSCI that they could not trade it, and the index provider dropped GoTo and CPIN from its Global Standard Index on August 13.

"If implemented, this is a meaningful step in the right direction," said Mohit Mirpuri, a partner at SGMC Capital in Singapore. "More importantly, it directly addresses some of the market structure concerns raised by MSCI, which should help Indonesia's case ahead of the next review."

Losing emerging-market status would be expensive in a way no domestic reform can offset - passive money tracking EM benchmarks would have to sell, and Indonesia's $624bn equity market is not large enough to absorb that gracefully. Jakarta has spent this year discovering that an investor-protection rule which makes a stock untradeable protects nobody, and that index providers grade on price formation rather than intentions.

Some shares can already trade below the threshold through the full call auction, a mechanism that matches orders at scheduled times rather than continuously. Indonesia's emerging-market status has been hanging in the balance since June, and the region has been tightening market structure more broadly - Malaysia moved first on free-float requirements in February.