Stock Trading On The Transparent Exchange, Why?

Illustration. (Photo: Doc. Antara)

JAKARTA - The Indonesia Stock Exchange (IDX) has introduced a new feature on the Exchange trading system called the Indicative Equilibrium Price (IEP) and the Indicative Equilibrium Volume (IEV) on December 6, 2021. This feature aims to increase transparency in the establishment of stock trading opening and closing prices.

IDX Director of Trading and Regulation Irvan Susandy explained that the implementation of the IEP and IEV is an important step in creating more transparent trade for investors. Previously, pre-opening and pre-closure sessions used the call authorization (blind orderbook) mechanism without providing IEP and IEV information to investors.

"With the implementation of the IEP and IEV, there is reference information on prices and volumes to assist investors in determining the price of orders submitted to the system as a transaction strategy," said Irvan in a written statement, Tuesday, April 16.

Irvan explained, this feature provides several benefits for investors. First, IEP and IEV information can be used as a reference for prices in call-auction trading sessions, including pre-opening, pre-closure, and periodic call authorization sessions. This allows investors to find out the equilibrium price of the Effect according to the overall order on the orderbook.

Then, continued Irvan, IEP and IEV also distinguish themselves from the previous features of the Exchange. Previously, in the call action session, all orders were met at one price without providing indicative information to investors.

"With the IEP and IEV, investors can get information on price and volume indications that will be encountered at the end of the session," he added.

In addition, Irvan explained that the roles of IEP and IEV are also very important in stock trading on Special Monitoring Boards. In the periodic call authorization mechanism, only IEP and IEV are displayed as price indicative information and trading volume. This allows investors to continue to participate in stock trading by utilizing the information available in real-time.

"For example, if there are investors who want to buy a stock with an existing IEP value and the investor wants to make a buy order, investors can enter it at the IEP price taking into account the availability of volume on the IEV. If investors want a greater matching potential, the investor can use a market order or make a purchase order at a price slightly above the IEP value while still monitoring the movement of the IEP because the IEP and IEV will be calculated in real time every time there is a change of orderbook," he continued.

To be able to take advantage of this feature, Irvan said that investors can access IEP and IEV information through online trading or mobile trading applications belonging to Exchange Members in pre-opening, pre-closure, and periodic call authorization trading sessions for shares on the Special Monitoring Board. In addition, this information is also available through the IDX Mobile application which can be downloaded for free.

"By utilizing IEP and IEV information, investors can obtain information indicating the price to be formed and the volume to be encountered at the IEP price at the end of the session," he concluded.