OJK: IDX will double the free float rule to 15%, and stocks will start to go up

Jakarta, Thekabarnews.com—The Indonesia Stock Exchange (IDX) will shortly amend its free float rule. This change comes according to the country’s Financial Services Authority (OJK). The minimum public share ownership ratio will go from 7.5% to 15%.

Mahendra Siregar, the chairman of OJK, said that the new policy will put transparency first for listed firms. He also mentioned clear regulations for the adjustment time. In addition, he emphasized that issuers will have a specific timeframe to comply with the new standard before facing any penalties.

“Companies that do not satisfy the standard would have to leave,” Mahendra added. He also claimed that OJK will make sure that the whole adjustment process goes smoothly and follows international best practices.

OJK further stressed that the rule will take into account feedback from global index providers like Morgan Stanley Capital International (MSCI). Mahendra said that the regulator will finish all of the technical work needed to change the policy. Raising the rules for public share ownership data is part of the proposal to enhance market trustworthiness.

According to Warta Economi on Thursday, January 29, the pressure on the Indonesian Composite Index (IHSG) started to relax. After a big sell-off early in the afternoon, market losses got smaller.

At 13:58 WIB, the IHSG had fallen 215 points, or 2.60%, to 8,101. This was a big bounce back from the index’s low point of the day at 10:00 WIB. At that low, it fell 829 points, or about 10%, to 7,489.

Along with the policy clarification, some big-cap stocks started to bounce back. Bank Central Asia (BBCA) shares went up 1.2%. CUAN shares went up 2.4%, and Bank Rakyat Indonesia (BBRI) stock went up 0.9%.

The proposed rise in free float, according to market watchers, aims to increase market liquidity and facilitate price discovery. Additionally, it will align Indonesia’s capital market with global standards. However, this approach is likely to be hard on enterprises with tightly held ownership structures. For example, it may be difficult for family-owned and conglomerate-backed businesses.

OJK said it will keep working with IDX and other market players to make sure the transition goes smoothly. The regulator said again that the regulation is part of a larger effort to make Indonesia more appealing to global investors and better protect investors.

OJK expects that the new free float criterion will help keep the market stable in the long run. At the same time, it will treat issuers fairly.