IDX ready for symmetrical auto rejection

JAKARTA. Indonesia Stock Exchange (IDX) plans to revive old rule about symmetrical auto rejection for upper and lower limits. Recently, IDX has prepared the regulation draft to be approved by Financial Services Authority or FSA (OJK).

”I have signed the draft. We will submit it to FSA,” said Director of Transaction Monitoring and Obedience of IDX Hamdi Hassyarbaini on Friday (9/9).

Before changing the regulation, IDX has previously conducted mocked trading. Meanhwile, FSA will analyze the effect of the mechanism to Jakarta Composite Index (JCI) prior to approving the mechanism.

“FSA will compare the current market condition with last year condition when symmetrical auto rejection took into effect,” Hamdi said. Even though the mechanism needs to have FSA approval, the symmetrical auto rejection will be ruled under IDX circular, not under FSA regulation.

As an information, by applying auto rejection, shares trading system in IDX can automatically reject selling offer and buying demand of equity securities. The rejection apllies when the selling offer and buying demand of equity securities have exceeded the price limit or amount of equity securities set by IDX. In shares trading, price of a share has highest and lowest limits.

Decision Letter of IDX Director Nomor Kep-00096/BEI/08-2015 on the Change of Auto Rejection Limit sets the auto rejection change for 10% of upper limit on three price ranges.  

IDR50 to IDR200 of share price ranges has upper limit at 25%. Share price ranges between IDR200 to IDR5,000 has upper limit at 20%, while above of IDR5,000 of share price  has upper limit 20%. IDX issues the policy about upper and lower limits when market is less conducive and experienced profit taking during global economy fluctuation.

According to Head of Research Department of Universal Broker Indonesia Satrio Utomo, symmetrical auto rejection mechanism will improve share trading condition and increase volatility. “It is expected that condition of securities transaction will be better,” Satrio said.

However, Head of Research Department of Bahana Securities Harry Su said that the symmetrical auto rejection will not affect shares trading. “But trading will be simpler. So this is good,” Harry said.

Now just waiting for green light from FSA.(Translator: Muhammad Farid)