IDX: Implementation of Stock Liquidity Providers Drives Increase in Transactions
Jakarta (ANTARA) - PT Bursa Efek Indonesia (IDX) has noted that the implementation of stock liquidity providers (LP) has driven an increase in daily transaction values for stocks that have undergone quotation. The IDX implemented the stock LP as an effort to strengthen the quality and liquidity of trading, as well as to increase investment attractiveness through more liquid, efficient, and transparent trading.
“This implementation is expected to support more efficient trading by providing more consistent buy and sell quotes in the market by stock LPs, thereby making it easier for investors to transact and supporting a more optimal price formation process,” said Acting President Director of IDX, Jeffrey Hendrik, in an official statement in Jakarta on Monday.
Jeffrey stated that the response and interest from exchange members (AB) towards the stock LP programme show positive development. To date, two securities firms have conducted stock LP quotations: PT Phintraco Sekuritas since 20 April 2024, and PT Mandiri Sekuritas since 4 May 2024.
“The increase in participation from exchange members demonstrates the growing interest of industry players in the stock LP programme, while serving as a shared commitment to supporting the improvement of trading quality and liquidity on the exchange,” said Jeffrey.
Looking ahead, the exchange hopes the number of exchange members joining this programme will continue to grow, alongside increasing understanding and utilisation of the stock LP scheme. The initial quotation by Phintraco Sekuritas was conducted for five stocks: PT Gudang Garam Tbk (GGRM), PT Pabrik Kertas Tjiwi Kimia Tbk (TKIM), PT Trans Power Marine Tbk (TPMA), PT Asuransi Tugu Pratama Indonesia Tbk (TUGU), and PT Wintermar Offshore Marine Tbk (WINS).
In the period one week before and after implementation, the IDX recorded that these stocks showed an increase in average daily transaction values, with percentage increases ranging from 25.98 per cent to 119.44 per cent.
“We see that stock LP activities have a positive impact on improving trading quality and stock liquidity in the market, which indirectly strengthens investor confidence in the Indonesian capital market,” said Jeffrey.
Meanwhile, the President Director of Phintraco Sekuritas, Ferawati, stated that the company’s participation in the stock LP programme is part of its commitment to playing a more strategic role in developing the quality and depth of the Indonesian capital market. Since the beginning of implementation, she believes that the development of stock LPs shows a positive direction for strengthening the trading structure on the exchange.
On the other hand, she reminded that the success of this programme requires close collaboration between the exchange, exchange members, issuers, associations, and investors, so that the benefits of stock LPs can be felt more widely by all market participants.
“In its implementation, we see that the effectiveness of stock LPs requires strong collaboration between the exchange, exchange members, listed companies, and relevant associations, particularly in building a more comprehensive understanding of the strategic function of stock LPs in supporting trading liquidity quality,” said Ferawati.
Her company has prepared system infrastructure, dealing team readiness, and a risk management framework to ensure that quotation activities can run optimally and sustainably. “Stock LP activities do not only focus on providing quotes, but also serve as part of the effort to build a more liquid, efficient, and credible market,” added Ferawati.
According to her, the main challenge in stock LP activities is maintaining quotation consistency amidst dynamic market conditions and ever-changing volatility. “Therefore, LP activities require trading discipline, technological support, and strong risk management so that the liquidity created can remain healthy and sustainable,” said Ferawati.
Furthermore, she views the prospects for stock LPs in Indonesia as quite good, in line with the focus of the IDX and regulators in encouraging market deepening and improving the trading quality of the Indonesian capital market. “Collaboration between the exchange, exchange members, issuers, associations, and investors will be a vital factor in accelerating the effectiveness of the stock LP programme in the future,” concluded Ferawati.