The Indonesia Stock Exchange (IDX) has obtained approval from the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) for its plan to start stock trading earlier and to implement a pre-closing and post-closing mechanism.
“The decree has been signed by the Bapepam-LK head,” Bapepam-LK chief for transactions and securities firms Yunita Linda Sari said on Thursday.
Under the new regulation, the IDX will start trading 30 minutes earlier with the opening bell now ringing at 9 a.m. The new hours aim to reduce the gap between IDX’s trading hours and other stock exchanges in Asia.
Neighboring countries’ stock exchanges such as Singapore Exchange (SGX) and Bursa Malaysia (MYX) begin trading at 9 a.m. local time (8 a.m. Jakarta time).
Tokyo Stock Exchange (TSE) launches daily trading at 9 a.m. local time (7 a.m. Jakarta time) while the Hong Kong Stock Exchange (HKEX) and the Shanghai Stock Exchange (SSE) start stock trading at 9:20 a.m. and 9:30 a.m. respectively (8:20 a.m. and 8:30 a.m. Jakarta time).
“We will no longer start trading far after other bourse and fundamental objectivity will be the main reason for investors to enter or exit the market,” IDX director of trading and membership Samsul Hidayat said.
Adding that the longer trading hours could also increase liquidity as well as attract more investors from central and eastern parts of the country.
About 95 percent of domestic investors, according to Samsul, are Jakarta based people and institutions. The remaining 5 percent come from other parts of the country.
Bapepam-LK’s decree also approves the bourse’s proposal to implement a pre-closing and post-closing period mechanism.
Samsul said that by having a pre-closing period, the bourse would prevent the price manipulation that often took place at the end of the trading.
“This is part of a continuing effort to improve the bourse’s supervision,” he said. Under the regulation the pre-closing period will be from 3:55 p.m. to 4:00 p.m. and the post-closing period will be from 4:00 p.m. to 4:15 p.m.