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JAKARTA, April 2 : Indonesia has completed key stock market reforms ahead of a self-imposed deadline linked to MSCI's May index review, a senior official said on Thursday, following mass equity selloffs triggered by an MSCI warning earlier this year.
The proposed reforms were unveiled after index provider MSCI warned in late January that the country was at risk of being downgraded amid concerns about a lack of transparency around stock ownership and trading.
Around $120 billion of market value was wiped out on Jakarta's stock exchange (IDX) after the warning. So far this year, the index has dropped more than 17 per cent, putting it among the worst-performing stock markets in Asia, with the Middle East conflict also adding to the pressure.
Reforms launched by Jakarta include the release of more detailed shareholder data and the doubling of the minimum "free float" of tradeable shares for listed companies to 15 per cent, a move aimed at increasing liquidity and preventing stock price manipulation.
Authorities will publish a list of stocks with high shareholder concentrations after the market closes on Thursday, completing the MSCI-requested reforms, Hasan Fawzi, chief capital market supervisor of the Financial Services Authority (OJK), told reporters.
"We are optimistic," Hasan said, when asked whether authorities believe Indonesia will avoid a downgrade. "As of today, our position is in line, if not even more (transparent) and detailed than the conduct of regional and global markets."
Earlier this week, the OJK introduced a new policy allowing shareholders or global index providers to request information on the beneficial owner of an investor holding a more than 10 per cent stake in a listed company, Hasan said.
The Indonesia stock exchange has this week also issued regulations for the free float requirement, giving firms up to three years to comply.
The measures were introduced in consultations with index providers, and Indonesian authorities expect to receive feedback about whether the increased level of transparency has met their expectations, Hasan said, adding that officials plan to meet with MSCI in the third week of April.
Indonesia had previously said it was also talking to index provider FTSE about its reform agenda.
"We will continue firm actions against violations in the capital market, including stock movement manipulation, to restore trust," Hasan said.
The country has also pledged reforms beyond MSCI's requests, including demutualisation of its bourse, to modernise governance in the market.
