JAKARTA - The Financial Services Authority (OJK) together with the Indonesia Stock Exchange (IDX) and the Central Securities Depository of Indonesia (KSEI) have completed four strategic steps to strengthen the transparency and liquidity of the capital market. This initiative is part of eight action plans to accelerate the reform of the integrity of the Indonesian capital market as well as efforts to increase Indonesia's competitiveness in the eyes of global investors and index providers such as MSCI.
The four agendas include: (1) opening the data on share ownership above 1 percent to the public, (2) increasing the minimum limit of free float to 15 percent through adjustments to Bursa Regulation Number I-A and its Circular, (3) strengthening the granularity of investor data by KSEI to 39 classifications, and (4) implementation of the announcement of concentrated shareholding data or High Shareholding Concentration (HSC).
Through this policy, investors can now access more detailed information regarding the ownership structure of shares, ranging from the identity of shareholders, the number of ownership, status as controllers or affiliates, to Beneficial Owners. Share ownership data above 1 percent is available on the BEI website announcement page with the keyword "Shareholders above 1 percent".
Not only transparency, various efforts are being made to increase market liquidity, one of which is through increasing the minimum limit of free float to 15 percent. Acting President Director of the Indonesia Stock Exchange Jeffrey Hendrik emphasized that this policy also includes a redefinition of the concept of free float, as well as strengthening the classification of shares, including in the IPO process.
"The transition period is set for listed companies to mitigate potential short-term pressure on stock prices and market liquidity," said Jeffrey, quoted Friday, April 17.
He added, by maintaining the ownership threshold of 5% which is in line with global standards, this policy is expected to increase liquidity while attracting more investors.
Market transparency is also strengthened through the presentation of more granular share ownership data. The classification of investors, which was previously only 9 classifications, has become 39 classifications and types, providing a more detailed picture of investor composition. This information can be accessed by the public through the announcement page on the IDX website with the keyword "Report of Data Ownership of Listed Companies Based on Investor Classification".
In addition, the Indonesian capital market also adopts global best practices implemented by Hong Kong Exchanges and Clearing (HKEX) through the HSC announcement, namely information regarding shares with concentrated ownership in a small number of parties. Information on shares that are indicated by HSC is published through the BEI website on the announcement page with the keyword "High Concentration Share Ownership", so that it can be accessed by investors and the public. This information is published publicly to improve the quality of information while strengthening investor protection.
"Transparency of share ownership data above 1 percent and disclosure of HSC will improve the quality of market information while helping investors understand the ownership structure of listed companies more comprehensively," added Jeffrey.
Going forward, the IDX reiterated its commitment to continue reforms with a focus on strengthening transparency, liquidity, and market structure improvements.
"Through consistent reforms and open communication with all stakeholders, we are optimistic that the Indonesian capital market will be increasingly attractive to both domestic and global investors," said Jeffrey.
The strengthening was also accompanied by an increase in governance capacity and intensive socialization to market participants. Various socialization, both directly and online, is carried out to open a space for active dialogue with domestic and global stakeholders. BEI always opens open and constructive communication with all stakeholders. Communication channels have been provided to facilitate access to information and consultation for all market participants which can be done by sending an email to [email protected].
Capital market observer Hans Kwee assessed that the acceleration of transparency reforms carried out by the authorities as a positive step in improving the integrity of the Indonesian capital market. He also assessed that this policy is relevant in responding to global investor expectations.
"This is very good for improving the integrity of our capital market. This step also meets the demand of MSCI and increases the transparency class of the Indonesian capital market," he said.
Furthermore, Hans emphasized the importance of regulator communication with global index providers in maintaining investor confidence. He added, the opening of stock ownership data and strengthening investor data make the market more transparent, while increasing the minimum free float limit to 15 percent will have an impact on liquidity.
"The increase in free float will add stock supply in the market, so that liquidity has the potential to increase," he concluded.
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