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March 19, 2025 | 11:13 pm
TEMPO.CO, Jakarta - The Indonesian Financial Services Authority (OJK) has responded to a request from the Coordinating Minister for Economic Affairs, Airlangga Hartarto, to evaluate the regulation concerning temporary trading halts triggered by sharp declines in the Composite Stock Price Index (IHSG).
On Tuesday, March 18, 2025, the IHSG plummeted by 5.02 percent, reaching a level of 5,146, which activated the trading halt mechanism implemented by the Indonesia Stock Exchange (IDX) for 30 minutes.
Inarno Djajadi, Executive Chair of OJK's Capital Market Supervision, Derivatives Financial, and Carbon Market, confirmed that OJK has no plans to revise the trading halt regulation. "No, that is already our standard operational procedure," Inarno said following a press conference at the Main Hall of the Indonesia Stock Exchange (IDX) in Jakarta on Wednesday, March 19, 2025.
For context, the IDX establishes three thresholds for IHSG declines that trigger trading halts. First, a 30-minute trading halt is activated if the IHSG falls by more than 5 percent within a single trading session. This allows investors time to assess the market situation, as was recently observed.
Second, an additional 30-minute temporary trading suspension is implemented if the IHSG drops to 10 percent, aimed at mitigating further selling pressures. Third, if the IHSG continues to weaken by more than 15 percent, the BEI may halt trading until the end of the trading session or for an extended period with OJK approval. This extreme measure is designed to stabilize the overall market.
In anticipation of significant stock trading fluctuations, the OJK, as the regulatory body, has announced a policy response. The OJK has introduced a policy enabling share buybacks without requiring a general shareholders' meeting (RUPS) during periods of market volatility.
"As we know, stock trading on the Indonesia Stock Exchange since September 2024 has experienced a significant downward trend, with indications of a 1,682-point or 21.28 percent decline in the composite stock price index from its highest point to date," Inarno explained.
He emphasized that this share buyback option, without the need for an RUPS, provides issuers with the flexibility to stabilize stock prices during highly volatile market conditions and enhances investor confidence.
Previously, Coordinating Minister for Economic Affairs, Airlangga Hartarto, addressed the temporary suspension of stock trading due to the IHSG decline. "The 5 percent halt regulation was previously enforced during Covid-19. Certainly, there needs to be a review regarding the regulation," he said at the Presidential Palace in Central Jakarta on Tuesday, March 18, 2025.
Eka Yudha Saputra contributed to the writing of this article.
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