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Jakarta Post

Stock falls capped at 7%, no pre-opening trade as IDX prevents steep drops amid global market rout

Stock falls capped at 7%, no pre-opening trade as IDX prevents steep drops amid global market rout Employees walk near the screen of stock movements at the Indonesia Stock Exchange building, Jakarta, in February 2019. (Antara/Rivan Awal Lingga)
Riska Rahman
Jakarta   ●   Fri, March 13, 2020 2020-03-13 10:21 428 7f440ff09e92db75a02bbad206a495b9 1 Business IDX,stock-market,Indonesia-Stock-Exchange,market-rout,regulation,trading Free

Starting Friday, the Indonesia Stock Exchange (IDX) will halt trading for stocks that have fallen 7 percent and will scrap pre-opening trade as it moves to safeguard the local market from steep drops amid a historic global market rout.

The new rule, announced Thursday evening, changes a stipulation that had allowed all stocks to fall below 10 percent before facing auto rejection, in which the IDX's trading system will automatically reject a bid lower or higher than certain a certain percentage drop or increase.

The stock exchange will also suspend pre-opening sessions, which normally take place between 8:55 a.m. and 8:59 a.m., during which brokers can trade stocks prior to the real opening at 9 a.m.

“ […]Looking at global stock market developments and the Indonesian stock market, which are facing pressures, due among others to the coronavirus COVID-19 being declared a global pandemic by the World Health Organization (WHO), the Indonesia Stock Exchange is taking steps to minimize pressures on the Indonesian stock market […],” the bourse wrote in a statement.

Read also: Indonesian stocks hit circuit breaker upon opening in second day of trading halt

The trade of Indonesian stocks hit the circuit breaker on Thursday as the IDX imposed a 30-minute trading halt following a 5 percent slump to 4,895 at 3:33 p.m., or around half an hour prior to the end of trading for the day.

The new rule will maintain auto rejection for share price increases. Stocks priced between Rp 50 and Rp 200 can soar up to 35 percent before being automatically being rejected from trading. Stocks at Rp 200 to Rp 5,000 can rise up to 25 percent. Shares above Rp 5,000 each can gain 20 percent before auto-rejection.

The same rules are applied for newly listed stocks. A previous stipulation had allowed them to fall and drop twice the caps of regular stocks.

The new rule comes after the IDX also issued on March 10 a new policy on trading suspension for the broader stock index.

According to the policy, the bourse will halt stock trading for 30 minutes if the main gauge, the Jakarta Composite Index (JCI), falls by more than 5 percent. If the index keeps falling to more than 10 percent after the first suspension is lifted, the bourse will halt trading for another 30 minutes.

Trading will be stopped entirely if the JCI plunges deeper than 15 percent. The suspension can last for more than one day with approval or upon instruction from the Financial Services Authority.