Indonesia’s stock exchange may ease trading rules

JAKARTA: Indonesia’s stock exchange plans to cut the minimum trading price for shares and shrink the lot size in its drive to attract more retail investors and boost volumes.

The bourse would revise the decade-old requirement for stocks to maintain a floor price of 50 rupiah (1.5 sen) and lower the minimum order size from 100, said Laksono Widodo, director of trading and membership at PT Bursa Efek Indonesia, in an interview.

The Jakarta Composite Index has rebounded from last year’s sell off to trade near its all-time high reached last February as foreigners have turned bullish on Indonesian equities after being net sellers in the past two years. That’s as volume and turnover have climbed since the settlement period for stocks was cut to two days from three in November.

The bourse was eager to maintain the momentum, he said.

“It’s all about the development of the retail market and deepening of financial markets. We need to revise trading rules, and hopefully it all can come in the second half of the year.”

Twenty-eight of the 637 stocks in the benchmark Jakarta Composite Index stopped trading after their prices fell to 50 rupiah each.

Revising the floor price would allow these shares to change hands again at prices that would reflect their fundamentals, he said.

Reducing the lot size will bring high-value shares like PT Gudang Garam within the reach of retail investors. A single transaction in the stock under the existing norms cost 8.2 million rupiah. That’s more than twice the minimum monthly wage, here.

Also on the cards was easing of rules for companies planning first-time share sales after a record number of initial public offerings last year, said Laksono.

“The exchange has provided a good boost to the market,” said Taye Shim, head of equities capital market at PT Mirae Asset Sekuritas Indonesia.

“We expect a further increase in retail participation if the reduction in minimum transaction price and lot size were to materialise.”