- The Director of Business Development at PT Bursa Efek Indonesia ("BEI"), Jeffrey Hendrik ("Director"), has affirmed that BEI will soon reduce the number of shares that are transacted via the short-selling mechanism to include only constituents that derive from the IDX30 and LQ45 indices. In this regard, BEI has announced that a total of 112 shares were transacted via the short-selling mechanism during the period up to September 2024.
- In this context, it should be noted that short-selling trade refers to share transactions that are completed by investors who did not have any transacted shares to begin with. This type of short-selling trade is commonly practiced by investors with high-risk profiles who loan their shares to other parties (e.g. brokers) in order for said shares to subsequently be traded at higher sales prices.
- In terms of the above-mentioned indices, the Director has stated that a total of 23 stock exchange members ("Members") have already expressed an interest in becoming securities intermediary traders via the short-selling mechanism. Moreover, during a recent focus group discussion that was held with said Members, the Director also stated that several aspects of the short-selling trading mechanism would be further regulated, including: 1) The mechanism for the selection of shares; and 2) Prerequisites for prospective investors.
- In terms of investors, the Director has stated that the applicable requirements for public companies or issuers that will be deemed eligible to engage in short-selling trade will be further determined by the respective Members. In this regard, the Director believes that Members who are deemed eligible to become securities intermediary traders for short-selling trade will be assessed based on their risk management and information technology capabilities. (ANT)
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