Transparency and Liquidity of the Capital Market Strengthened

The capital market authority is accelerating reforms to strengthen transparency and liquidity amid demands to increase global investor confidence in the Indonesian market. The Financial Services Authority, together with the Indonesia Stock Exchange and the Central Securities Depository Indonesia, has completed four strategic steps as part of the eight action plans for capital market integrity reform. These efforts are also directed at enhancing Indonesia’s competitiveness in the eyes of global investors and index providers such as MSCI. The four steps include opening data on share ownership above 1% to the public, increasing the minimum free float limit to 15%, strengthening investor data granularity, and implementing announcements of concentrated share ownership or High Shareholding Concentration (HSC). Through these policies, investors can access more detailed information on share ownership structures, from shareholder identities, ownership amounts, controlling or affiliate status, to beneficial owners. This information is available on the official BEI website. Not only transparency, the authority is also promoting increased market liquidity through free float policies. Acting CEO of BEI, Jeffrey Hendrik, said this policy also includes redefining the free float concept and strengthening share classifications, including in the initial public offering (IPO) process. “A transition period is set for listed companies to mitigate potential short-term pressure on share prices and market liquidity,” Jeffrey stated. He added that by maintaining the 5% ownership threshold in line with global standards, this policy is expected to increase liquidity while attracting more investors. Transparency is also strengthened through the presentation of more detailed investor data. Investor classifications, previously only nine categories, are now expanded to 39 classifications, providing a more detailed picture of the investor composition in the capital market. In addition, the Indonesian capital market is beginning to adopt global practices like those implemented by Hong Kong Exchanges and Clearing through HSC announcements, namely information on shares with ownership concentrated in a small number of parties. This information is published openly to improve information quality and strengthen investor protection. “Transparency of share ownership data above 1% and HSC disclosure will enhance market information quality while helping investors understand company ownership structures more comprehensively,” said Jeffrey. Moving forward, BEI emphasises that it will continue reforms focusing on strengthening transparency, liquidity, and refining market structures. The authority is also enhancing governance capacity and expanding outreach to market participants, both directly and online. Capital market observer, Hans Kwee, views this accelerated reform step as a positive effort to improve the integrity of the Indonesian capital market while addressing global investor expectations. “This is very good for improving the integrity of our capital market. This step also meets MSCI’s demands and elevates the transparency class of the Indonesian capital market,” said Hans. He added that opening share ownership data and strengthening investor data will increase transparency, while raising the minimum free float limit to 15% has the potential to drive market liquidity. “Increasing free float will add share supply in the market, thus potentially increasing liquidity,” he said.