IDX selects liquid stocks to mitigate short selling manipulation

Jakarta (ANTARA) - PT Bursa Efek Indonesia (IDX) has selected stocks with high liquidity levels for the implementation of short selling transactions to mitigate the risk of price manipulation and transactions by specific parties.

IDX Development Director Iding Pardi stated that choosing liquid stocks is one of the strategies to prevent trading manipulation or cornering practices that have the potential to move stock prices through a small group of individuals.

“The important thing is that when short selling occurs, there must not be trading manipulation or cornering that moves market prices by a handful of people. That is the core issue. That is why we are choosing liquid stocks, so they cannot be easily manipulated by certain parties,” Iding said in Jakarta on Friday.

According to him, the implementation of short selling is also accompanied by several regulations, including the requirement that transactions must be conducted at the prevailing price or above. The Exchange also maintains specific parameters to temporarily halt transactions.

“Because this is new, and we also want to see its impact on the market, and for investors to first adjust, we will implement it on a limited basis. Therefore, the stocks will be limited, and there are also criteria for Exchange Members (AB) and even criteria for investors,” he added.

He mentioned that the candidate stocks for the initial stage are drawn from the LQ45 group, as they are deemed to have adequate liquidity. Nevertheless, the five stocks to be used are still undergoing an analysis process.

“For each sector, we look at the most liquid stocks, which will then be included in the short selling stock list. It will increase later; for now, there are only five, representing various different sectors,” he said.