IDX Demutualization Is Expected To Be A National Product And Financing Innovation Motor

JAKARTA - The government is preparing a Draft Government Regulation (RPP) regarding the demutualization of the Indonesia Stock Exchange (IDX), as a further step in the implementation of the Financial Sector Development and Strengthening Law (UU P2SK).

Through this demutualization, the IDX structure will shift from the exchange that is wholly owned by stock exchange members to the company which allows ownership by a wider party.

Director General of Stability and Development of the Ministry of Finance (Kemenkeu) Masyita Crystallin explained that separation between membership and ownership is needed to reduce potential conflicts of interest while increasing professionalism in stock exchange management.

"This is a strategic step to reduce the potential for conflict of interest, strengthen governance, improve professionalism, and encourage global competitiveness of the Indonesian capital market," he said in his statement, quoted Monday, November 24.

He added that the IDX is still one of the few major exchanges in the world that maintains the mutual structure. Meanwhile, a number of countries such as Singapore, Malaysia, and India have already carried out the transformation, so that their exchanges can develop faster and be more alert to follow global market changes.

Therefore, Masyita added that the demutualization structure is expected to encourage product and service innovation, starting from the development of derivative instruments, Exchange-Trad Fund (ETF), to infrastructure financing instruments and energy transitions, so that in the end it increases market depth and liquidity.

He emphasized that the demutualization policy must be followed by other supporting reforms, namely one of the focuses of increasing free float to strengthen market liquidity.

"So that the impact on the depth and liquidity of the capital market is truly optimal," he said.

In terms of demand, increasing the involvement of domestic investors, both retail and institutional, is also a priority. The government is preparing policies to strengthen the role of pension fund institutions as investors' anchors, including through improving cut loss rules so that they have certainty of investing in the capital market.

"This cut loss policy will later be directed to provide certainty for retirement fund managers in investing in the capital market, so that they can play a more active role and act as investor anchors that encourage capital market deepening," he explained.

The Ministry of Finance also conducted a comparative study with India, whose market capitalization increased from USD 1.56 trillion (72.86 percent of GDP) in 2014 to USD 5.17 trillion (133.5 percent of GDP) in 2024.

He added that the growth was triggered by improved governance, increased involvement of domestic investors, and the use of technology.

Furthermore, Masyita said that the preparation of the RPP demutualization was carried out through a comprehensive technical study and consultation with regulators, the IDX as SRO, industry players, and legislative institutions.

"We ensure that the RPP preparation process is carried out in a careful, transparent, and participatory manner. The goal is strategic, namely to strengthen the capital market as a long-term source of financing that is able to encourage Indonesia's economic transformation towards developed countries," he said.