Jeffrey Hendrick, the interim director of the Indonesia Stock Exchange (BEI), stated that the exchange hopes to complete the evaluation of the new trading system based on the Full Call Auction (FCA) mechanism by the second quarter of 2026. Hendrick confirmed during a press conference at the exchange's headquarters in Jakarta that this process has already begun and is part of ongoing reform efforts in the Indonesian financial market.
Hendrick explained that the evaluation aims for a comprehensive review of the current system, noting that this review is part of the exchange's commitment to improving performance and increasing transparency. He added that the evaluation will include a review of the amended free float rules, which have been adjusted to 15%, potentially affecting the listing criteria for companies on the watch lists.
Details of the Event
The Full Call Auction (FCA) mechanism is a specific trading system at the Indonesia Stock Exchange, where buy and sell orders are aggregated during a specified period and then executed all at once at a predetermined price. This price is based on the balance of supply and demand in the market, enhancing trading efficiency and reducing manipulation.
Hendrick pointed out that the goal of the amendments is to improve transparency regarding share ownership data, which will assist investors in making informed decisions. He also added that these amendments could lead to a reduction in some criteria that were previously used to determine companies listed on the watch lists.
Background & Context
This step is part of the Indonesian government's efforts to enhance the capital market and improve the investment environment in the country. Indonesia has seen numerous financial reforms in recent years aimed at attracting more foreign investments and boosting confidence in the local market.
Historically, the Indonesia Stock Exchange has faced challenges related to transparency and governance, negatively impacting its attractiveness to investors. However, the current reforms aim to address these issues and improve the image of the Indonesian financial market on an international level.
Impact & Consequences
These reforms are expected to improve the investment environment in Indonesia, enhancing the country's ability to attract foreign investments. Increased transparency may lead to greater confidence among investors, contributing to overall growth in the financial market.
Moreover, improving the trading system could help reduce risks associated with trading, making the market more appealing to new investors. These steps may also lead to an improved ranking for Indonesia in global financial transparency indices.
Regional Significance
Indonesia is one of the largest economies in Southeast Asia, and any improvements in its financial system could impact regional markets. These reforms could serve as a model for Arab countries seeking to enhance their financial markets and boost their attractiveness to foreign investments.
Given the economic challenges faced by many Arab nations, leveraging successful experiences like Indonesia's could be a strategic step towards fostering economic growth.