Indonesian Capital Market

Heryadi Indrakusuma SE. Ak, MH.

Economics and Business Faculty, Airlangga University
Trading Mechanism in Indonesian
Capital Market
SRO, Relationship of Works
provider of securities trading
facilities and infrastructure
provider of securities transaction
clearing and guarantee services
provider of central custodian
and settlement services
SRO: A self-regulatory
organization (SRO) is a
non-governmental
organization which has
the power to create and
enforce stand-alone
industry and professional
regulations and standards.
In the case of a financial
SROs, such as a stock
exchange, the priority is to
protect the investor by
establishing rules,
regulations, and set
standards of procedures
which promote ethics,
equality, and
professionalism.
Primary Market v Secondary Market
Allotment mechanism
Full
Commitment Continuous
Capital Primary Underwriting Auction
Market Market Process
Best Effort
Time Priority

Regular
Market*
Time Priority
Intra Market
Negotiation
Secondary Market T+2
Market
Settlement

*Guaranteed settlement T-0 Market

OTC Un-guaranteed settlement

Opening Account Steps
• SID Creation
• Securities Sub Account Creation
• AkSes Card

Opening Account through KYC

Cash Account for settlement (RDN)
Trading Process

Clients
Dealing Room
Order Management

Automatic Risk Management

Ordering
Securities Online
Trading System Surveillance
Management

Operational
Monitoring System

Direct Market
Access
Detail Trading Process

Market Information

BUY order SELL order

BUY SELL
Buy status status Sell

Clearing/settlement report

Online Trading Platform Online Trading Platform

Securities House Securities House

Securities transfer Securities transfer

Transfer instruction

Fund transfer
Fund transfer
Price Fraction and Auto-rejection
Price Range % Ceiling % Bottom IPO Price
IDR 50 - <IDR 200 35% 35% 70%
>IDR 200 - <IDR 5000 25% 25% 50%
>IDR 5,000 20% 20% 40%

Price Range Fraction

Price Movement Max. Price Movement
< IDR 200 IDR 1 IDR 10
IDR 200 - < IDR 500 IDR 2 IDR 20
IDR 500 - < IDR 2,000 IDR 5 IDR 50
IDR 2,000 - < IDR 5,000 IDR 10 IDR 100
> IDR 5,000 IDR 25 IDR 250

Source: IDX Trading Rule II.A

Margin Trading and Short Selling
Margin Trading and Short Selling
MARGIN TRADING refers to the practice of using borrowed funds from a
Securities Broker House to trade a Stocks under list of allowable stocks for
margin trading issued by the IDX . A stock bought on margin generally
requires the investor to supply certain percentage of the value of the
purchase transaction as collateral.
SHORT SELLING is the sale of a stock that the seller has no said
stock or has borrowed. A short seller profits if a security's price
declines. In other words, the trader sells to open the position
and expects to buy it back later at a lower price and will keep
the difference as a gain.

IDX issues lists of stocks that are eligible for MARGIN

TRADING and SHORT SELLING
General Provisions of Stocks that are Eligible for Margin Trading and
Short Selling

Margin Trading Short Selling

• Stocks listed more than 12 months Total stocks with the ownership below
5% of the total listed stocks with the
minimum 20% of:
• Stocks with daily average transaction • The last 6 months up to review
value in Regular Market of IDR 5 Bio periods for those stocks listed
OR IDR 250 million with transaction minimum or more than 6 months
volume more than 500 thousands
• Traded > 90 Bourse days • At least 3 months since listed up to
consecutively within the last 6 review periods for those stocks listed
months less than 6 months
• PER not more than 3x PER of Market
• Stocks held by public at least 50
million stocks and at least 7.5% of
issued paid in capital
Requirement for Margin Trading and Short Selling

Target Stocks for Stocks as Collateral

Margin Trading and for Margin Trading
Short Selling and Short Selling

190 Margin
Tradeable Stocks Margin Stocks
(can be changed every
month)

148 Stocks eligible Government Bonds

for short selling or A+ Corporate
(can be changed every
month)
Bonds

Eligible for transaction Collateral

Trading Suspension

• System error in the Jakarta Automated Trading System, KPEI

system and KSEI system due to over capacity, bugs, and
remote trading network failure that may affect the market
• Market irregularities that creates index drops significantly
• Force majeure events

IHSG drops more than 10% Trading halt for 30 minutes

IHSG Drops more than 15% Trading suspension for one or

more trading sessions subject
to OJK’s approval
Rights of the Investors

• Right to be informed – Listed companies are required to

send financial reports to registered shareholders
• Right to receive entitlements, e.g. dividends, bonus shares
• Right to vote in shareholders ’ meetings and to raise
questions with the senior management during GSM
• Right to be informed of the license status, fees and charges
• Right to receive transaction documents i.e
contract/agreement , account statements etc.
• Right to ask for sufficient information to facilitate you to
manage your investment
Responsibilities of the Investors

• Do your homework, i.e. read the product offering

documents
• Know your investments, e.g. understand the features and
risks of an investment before committing your investment
• Don’t follow the crowd. Trust on facts, not rumors
• Don’t commit beyond your means
• Know your financial services provider: check the Public
Register of Licensed Persons and Registered Institutions
License Details, Types of regulated activities Licensing
conditions, Addresses, Public Disciplinary Actions
information (if available)
Responsibilities of the Investors

• Read the client agreement before signing

• Choose an appropriate account that suits your needs
• Place clear instructions
• SeƩle transactions directly with your financial services
provider on time
• Read transaction documents to monitor your account
• Don’t lend your account to others to trade
Risk Assessment and Risk Management
Risk Assessment
• Price volatility
• Business failures
• Corporate mis-governance
• Liquidity risk
Trading suspension
• Brokerage failure / fraud
• Leverage risk
Risk Management
• Diversification
• Don ’t chase rumors
• Read corporate news
issued by the listed
companies you have
invested in
• Think twice before
engaging in day trading
Thank you