JAKARTA - The Financial Services Authority (OJK) is preparing to strengthen capital market regulation by setting a minimum limit of 15 percent of public share ownership (free float) for all issuers on the Indonesia Stock Exchange (IDX).
This provision will apply to companies that have just listed on the exchange as well as issuers who have been listed for a long time. OJK encourages the implementation of this rule through the Self Regulatory Organization (SRO) of the capital market, including the IDX.
Low free float is considered to reduce trading liquidity and increase the risk of stock price volatility. This issue is also highlighted by MSCI as a provider of global indices that are widely used as a reference for foreign institutional investors.
Chairman of the OJK Board of Commissioners Mahendra Siregar emphasized that this policy will be accompanied by strict monitoring and enforcement mechanisms.
"Issuers who cannot meet the free float provisions will be under special supervision and may be subject to an exit policy," he wrote, Friday, January 30.
Commissioning of the IDX Inarno Djajadi stated that the exchange has consistently coordinated with MSCI to improve the quality and attractiveness of the Indonesian capital market.
"We have had a number of meetings with MSCI, including a high-level meeting on December 10. The goal is that the provisions can be fulfilled before May," he said.
OJK is targeting an official announcement regarding the details of the free float provisions, including the deadline for fulfillment and the exit policy mechanism, in the near future.
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