The Indonesian Stock Exchange Board of Directors Circular Letter No. SE-00003/BEI.PSH/04-2011 on the Supervision of Warrant Trades on the Stock Exchange (“Circular”) has been issued, updating the previous circular, Jakarta Stock Exchange Board of Directors Circular Letter No. SE-002/BEJ/07-2002, which governed the same issue.
Under Item 1 of the Circular, the Indonesian Stock Exchange will send an electronic written notification to stock exchange members who purchased and sells warrants, with a price that is higher or lower than the underlying stock price, on the Jakarta Automated Trading System (JATS).
Pursuant to Item 2, a warrant trade (under Item 1) will be temporarily suspended by the Stock Exchange, if the transaction reaches the same price as the underlying stock or goes higher.
Item 3 states that suspensions under Item 2 will be applied for a single trade session, to give traders enough time to reconsider their investment in the aforementioned warrant.
The suspension, pursuant to Item 4, will be announced via a Market Announcement. If the transaction remains the same (i.e. under Item 2) the Stock Exchange will not suspend the trade.
Compared to the previous circular letter, there are no significant amendments in the current Circular. There are only two additional rules, under Item 2 (a) and (b), which did not exist in the previous circular letter. The additional rules are:
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a.
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when a warrant transaction takes place during the first session, it will be suspended in the second session; (Item 2 (a))
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b.
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when a warrant transaction takes place in the second session, it will be suspended in the first session of the next day. (Item 2 (b)).
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The Circular repeals and replaces Jakarta Stock Exchange Board of Directors Circular Letter No. SE-002/BEJ/07-2002.
The Circular has been in force since 26 April 2011.
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