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Authorities finalize legal revisions to relax margin trading
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IDX president director Tito Sulistio answers questions from journalists. (JP/Anton Hermansyah)
T
he Financial Services Authority (OJK) and the Indonesian Stock Exchange (IDX) are finalizing amendments to two IDX regulations on margin trading.
Margin trading allows investors to purchase more stocks than they would be able to under normal circumstances by borrowing money from their brokers.
The revised IDX Regulation III-I concerning stocks and trading in margin and short-selling transactions distinguishes between two categories of securities firms.
Those with a net adjusted working capital (MKBD) above Rp 250 billion (US$18.7 million) will be allowed to engage in margin trading on all eligible stocks, while those with less working capital can only margin trade LQ45 stocks.
IDX data from last Thursday show that only 28 of 105 active securities firms have MKBD exceeding Rp 250 billion.
The revision also introduces several provisions not stipulated in existing regulations, such as the takeover of a customer’s obligations by another securities firm.
Meanwhile, a revision of IDX Regulation II-H concerning margin and/or short-selling relaxes margin stocks criteria and enables more stocks to be transacted in margin trading.
The relaxation is expected to increase the number of stocks eligible for margin trading to 179 stocks from 57.
"We have already finished the draft and are waiting for the OJK's approval," IDX president director Tito Sulistio told a media briefing in Jakarta on Monday. (bbn)
