FTSE, the indexing company behind the $4.6 billion iShares FTSE China 25 Index Fund (NYSEArca: FXI), concluded its 2012 index review with no changes to its country classification, though it did put Argentina on notice for possible future removal as a frontier market under the FTSE system.

FTSE, which is probably most well known as the owner of the benchmark for British stocks, also added Mongolia to its list of countries in line for possible promotion to frontier market status, saying in a press release that the east Asian country is developing a market infrastructure that is attractive to foreign investors through improvements to its trading, settlement and custody policies.

For its part, Argentina is being singled out due to the South American country’s continuing stringent capital controls imposed on international investors and a perceived lack of an independent regulatory authority to protect the rights of shareholders. In 2010, FTSE demoted Argentina to frontier status from the indexing firm’s “Secondary Emerging” category.

Including Argentina and Mongolia, FTSE’s “Watch List” for potential changes to its family of indexes now includes seven countries. The countries and the reasons they are on the list are:

• China “A” Share – Possible inclusion as Secondary Emerging
• Greece – Possible demotion to Advance Emerging
• Kazakhstan – Possible inclusion in Frontier
• Kuwait – Possible inclusion as Secondary Emerging
• Mongolia – Possible inclusion in Frontier
• Poland – Possible promotion from Advanced Emerging to Developed
• Taiwan – Possible promotion from Advanced Emerging to Developed
• Ukraine – Possible inclusion in Frontier

All these questions will be taken up a year at FTSE’s next annual classification in September 2013, the company said.

In a separate annual country classification review of its own earlier this year MSCI made no changes, but kept South Korea and Taiwan under review for possible reclassification to developed markets from their current status as emerging markets.

MSCI also added debt-gorged Greece to its list of possible reclassifications, saying the southern European country risked being demoted to an emerging markets country from its current developed-market status. MSCI also said that Morocco has been added for potential consideration as a candidate for the MSCI Frontier Markets Index.