Indonesia’s stock exchange relaxes listing norms to boost trading

A man takes pictures inside the Indonesia Stock Exchange building in Jakarta, Indonesia, September 6, 2018. REUTERS/Willy Kurniawan

Indonesia’s stock exchange is cutting settlement times and loosening listing requirements in a bid to lure investors and move up the rankings of regional bourses.

The changes should boost daily turnover on the exchange to 9 trillion rupiah ($614 million) from 8 trillion rupiah at present, according to PT Bursa Efek Indonesia President Director Inarno Djajadi. “This is a big bang for us,” he said in a recent interview.

From Nov. 26, the settlement time for stock transactions will be cut from three days to two, bringing Indonesia into line with regional exchanges such as Thailand and Vietnam, Djajadi said. The IDX will also set up an electronic platform for trading bonds, and will create a separate board for startups that will greatly reduce listing requirements, he added.

The shorter settlement time “will benefit everyone in the industry from the liquidity side, and create efficiencies for foreign investors, by reducing their need to hedge,” Djajadi said.

The Indonesian exchange is trying to lure back foreign investors after they pulled nearly $3.5 billion out of local equities so far in 2018. The Jakarta Composite Index is down 7 percent this year, as Indonesia has been hurt by the knock-on effects of higher U.S. interest rates on several emerging markets.

The exchange’s “accelerated board” for startups will exempt them from having independent directors or commissioners, or from having their financials statements audited, Djajadi said. Entrants to the new board will also be excused from the current requirement that they are profitable at the time of listing.

“We are planning to finalize that by the end of the year,” Djajadi said. The new board “will be occupied by small and medium-sized enterprises and startups.”

Earlier this year, the exchange held discussions with companies including e-commerce unicorn Go-Jek in a effort to get them to list.

Bloomberg