The Indonesia Stock Exchange (BEI) is set to implement new regulations that will reshape trading practices for equity securities and structured warrants. Effective from December 9, 2024, these changes, outlined in KEP-00196/BEI/12-2024 and KEP-00197/BEI/12-2024, aim to increase market efficiency and stability while aligning with regional exchange practices.

One of the major updates in the new regulation for equity trading (Peraturan Nomor II-A) is the expansion of shares eligible for trading during the pre-opening session. Previously limited to stocks listed on the LQ45 index, the new rules will allow all shares listed on the Main Board, Development Board, and New Economy Board to be traded during this session. This change is expected to facilitate a broader price discovery process, helping opening prices better reflect overall market conditions.

“The goal of these updates is to provide a more efficient price discovery process while also distributing orders more evenly,” explained Eko Susanto, BEI's Corporate Secretary. The changes are intended to alleviate the strain on the exchange’s trading system during the critical first moments of market opening, ensuring smoother operational flow via the Jakarta Automated Trading System (JATS).

Additionally, BEI has introduced new rules regarding auto rejection for structured warrants. On the first day of trading, the auto rejection rule will apply if the price of a warrant order matches or exceeds the last traded price of the underlying stock. After the first trading day, the rule will be based on a smaller value, ensuring that orders are subject to a tiered auto rejection system, depending on the warrant price.

The structured warrant regulation (Peraturan Nomor II-P) also includes updates that cover auto rejection mechanisms for structured warrants on the cash market and the regular market. For warrants traded on the cash market without liquidity providers, a tiered auto rejection system will apply to better reflect market dynamics.

In addition to the changes in auto rejection, the updated regulation introduces a new "Maximum Price Movement" rule for structured warrants. This feature will limit the maximum price changes for structured warrants based on their price range, aiming to strike a balance between mitigating excessive price volatility and allowing for larger price fluctuations compared to their underlying stock.

Key Changes:

1. Expanded Pre-opening Session: All stocks on the Main, Development, and New Economy boards will now be eligible for pre-opening trades.
2. Auto Rejection Rules for Warrants: A tiered system for price rejections to control volatility.
3. Maximum Price Movement for Structured Warrants: Price change limits depending on the warrant’s price range.

These regulatory updates, which mirror practices in regional exchanges, are expected to boost investor confidence and market stability, helping Indonesia's stock market maintain its attractiveness as a destination for foreign investment.

BEI’s adjustments reflect a commitment to improving the operational efficiency of the stock exchange while ensuring that market dynamics remain balanced. As market conditions continue to evolve, the implementation of these rules will be crucial for maintaining a fair and orderly trading environment.

BISNIS