FTSE classifies countries based on the quality of their financial markets, not just their economic development. It uses 21 criteria across areas like regulations, custody, trading, and derivatives to determine if a country has an Emerging, Secondary Emerging, Advanced Emerging, Developed, or Frontier market. FTSE recently moved South Korea from Emerging to Developed and added some criteria for classifying Frontier markets. These changes could impact index compositions and flows of funds for portfolios benchmarked to indexes like FTSE Developed Asia Pacific. FTSE aims to regularly review their market criteria and engage with exchanges to improve transparency and standardization.