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View all search resultsIndonesia grapples with stock market enforcement as index sinks below 5,000
Analysts question whether the current approach will deter future misconduct or simply lead wrongdoers to treat fines as just part of the cost of doing business.
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A man walk past in front of an electronic board displaying stock prices on Oct. 30 at the Indonesia Stock Exchange (IDX) building in South Jakarta. (JP/Iqro Rinaldi)
T
he Financial Services Authority (OJK) is seeking to strengthen capital market enforcement amid growing scrutiny from global index provider MSCI, saying it would prioritize administrative sanctions over criminal procedures in handling market violations.
However, analysts question whether the approach will deter future misconduct or simply lead wrongdoers to treat fines as just part of the cost of doing business.
“If there is any indication of violations in the capital market, the OJK will look into it and act as the gatekeeper,” said Agus Firmansyah, OJK’s head of the capital market, derivatives and carbon exchange regulation and development department, during a journalist workshop in Lombok, West Nusa Tenggara (NTB), on Saturday.
The Indonesia Stock Exchange (IDX) Composite Index has come under intense pressure since the start of the year, plunging more than 40 percent to become the world’s worst-performing major bourse. The decline has been driven largely by MSCI’s concerns over market transparency and coordinated trading.
The index fell a further 3.78 percent to 4,904.29 on Tuesday, its lowest level since the COVID-19 pandemic.
To address violations in the capital market and restore market confidence, OJK is implementing the “una via” principle, which requires it to choose a single legal channel between administrative sanctions and criminal proceedings, as mandated by the newly revised Financial Sector Development and Strengthening (P2SK) Law.
The Supreme Court has also recommended that the OJK reserve criminal proceedings as a last resort for serious violations, he added.
