TEMPO.CO, Jakarta - The Indonesia Stock Exchange (IDX) plans to revoke Decree No.Kep-00 096/BEI/08-2015 on the bottom limit of stock price. The letter regulates an auto rejection for stocks with offering prices of less than Rp50 per share. The rules were made to create fair trading and to maintain liquidity.
In the auto rejection rule, shares worth Rp50-Rp200 per unit may rise up to 35 percent. As for listed companies with shares Rp200-Rp5,000, the maximum price gain is 25 percent, while shares worth more than Rp5,000, may rise by a maximum of 20 percent.
The IDX's director for transaction monitoring and member compliance Hamdi Hassyarbaini said the bourse has been mulling to abolish the rule since August, citing that stock prices should be natural—not intervened by the regulator.
With the revocation, stock prices will be determined by the market. The IDX even plans to create its own board for low price stocks. "We will have a special board called the name penny stock," IDX president director Tito Sulistio said in Jakarta last Thursday.
Before they can enforce the rule, the IDX must get an approval from the Financial Services Authority (OJK)—something that is not likely to happen. OJK chief executive for capital market supervision Nurhaida said erasing the bottom price limit may cause the Rp50 or 'gocap' stocks to plunge—as these issuers tend to have financial performances.
"If we let the market decide on prices, investors will think twice before buying those stocks," she said in early October.
Some analysts are also on the opinion that abolishing the lower limit/auto rejection rule is a poor idea. Member of the Indonesian Securities Analysts Association Reza Priyambada said that leaving'gocap' stocks' prices to the market will only show that the IDX is not being firm against issuers. If the OJK approved the revocation, he said, there is a possibility gocap stocks will plunge Rp1 per share.
According to Reza, if IDX wants to increase trading frequency, the better way is by increasing the number of investor.
The IDX noted there are 28 listed companies with stocks prices that stagnate at Rp50 per share as of last week's closing. These issuers are also known as "sleeping companies" as their stocks have not been traded and left untouched by investors.
DESTRIANITA KUSUMASTUTI