IDX: Short Selling Could Boost Liquidity by Up to 17 Per Cent
The President Director of PT Bursa Efek Indonesia (IDX), Jeffrey Hendrik, believes that the implementation of short selling transactions could increase the liquidity of the Indonesian stock market by up to 17 per cent.
The IDX will reintroduce short selling transactions gradually on 15 September 2026, with the Short Selling Securities List to be published on 28 September 2026, becoming effective from October 2026.
“If the transaction targets align with the studies we presented last year, there is a potential for an increase in market liquidity of up to 17 per cent from the liquidity levels at that time,” Jeffrey stated during a media interview at the IDX Media Room in Jakarta on Wednesday.
Jeffrey explained that the actual realisation of liquidity will depend on two factors: the number of shares permitted for short selling and the number of Exchange Members (brokers) authorised to participate.
“Yes, our liquidity has certainly increased today, but it will depend heavily on how many shares we allow to be short sold and how many Exchange Members (AB) we grant permission to perform short selling,” said Jeffrey.
When asked about the projections from the study, he revealed that the projected figure was calculated based on the assumption that short selling would be conducted by a relatively limited number of Exchange Members.
“At that time, the assumption was based on five (Exchange Members),” Jeffrey added.
During the session, Jeffrey outlined three primary objectives for the reintroduction of short selling transactions.
“The policy is being implemented for three reasons: first, to meet investor liquidity needs; second, to provide better price discovery; and third, because this is a best practice in major stock exchanges worldwide,” Jeffrey explained.
In the initial phase on 28 September 2026, the IDX will publish a very limited list of short-sellable stocks, specifically those within the LQ45 index constituents.
He noted that in the early stages, the number of stocks will likely be limited to only 3 to 5 constituents from the LQ45 index.
For context, short selling is a capital market transaction strategy where an investor borrows shares and sells them with the expectation that the share price will fall, allowing them to buy the shares back later at a lower price.