OJK Approves Changes To Two Rules Regarding Short Selling

Indonesian stock market (photo; Antara)

JAKARTA - The Financial Services Authority (OJK) approved the amendment to two Indonesian Stock Exchange regulations related to short selling transactions.

The two rules are IDX Regulation Number III-I concerning Margin Membership and/or Short Selling and Regulation Number II-H concerning Requirements and Trade of Effects in Margin Transactions and Short Selling Transactions.

"So that with the OJK's approval, the IDX can issue and enforce IDX Regulation Number III-I and Regulation Number II-H as technical provisions from POJK 6/2024 concerning Financing Effect Transactions by Stock Companies and Short Selling Transactions by Stock Companies," said Head of Capital Market Supervisory, Derivative Finance and Carbon Exchange Financial Services Authority (OJK) Inarno Djajadi quoting Antara.

He said that in OJK Regulation (POJK) Number 6 of 2024, further technical provisions were regulated regarding the regulation of Stock Exchange Members (AB) who could carry out margin transactions and ABs that could finance short selling transactions.

In addition, it is also regulated that AB can make short selling transactions for their own interests and clustering for AB margins and/or short selling.

"Referring to POJK 6/2024 which will take effect 6 months from the date of promulgation, and the approval of Regulation III-I and II-H above, it is hoped that short selling transactions on the IDX can be implemented in October 2024," said Inarno.

Short selling is a share sale and purchase transaction by investors who do not have shares to make these transactions, so short selling techniques are often carried out by investors with high risk profiles.

The short selling mechanism is that an investor borrows shares from other parties, such as brokers, after which, the shares are sold at a higher price for profit.

Previously, IDX Development Director Jeffrey Hendrik revealed that there were 23 Exchange Members (AB) who expressed interest in participating as Intermediaries for Securities in the short selling mechanism, and they had participated in the Forum Group Discussion (FGD).

In the FGD, he explained that there were several things that his party had discussed, including arrangements at the AB level, arrangements for the choice of shares, and arrangements at the investor level.

"Well, it will probably be adjusted from the list of short selling effects that have been published by the stock exchange, from the results of today's discussion maybe that will change," said Jeffrey.