Indonesia's Financial Services Authority sets out eight-point capital market reform plan including a staged rise in minimum free float to 15%

Indonesia's Financial Services Authority (OJK), working with the government and capital market stakeholders, has published an accelerated reform agenda for Indonesia’s capital market through eight “quick action plans” aimed at strengthening liquidity, transparency and investor confidence. The measures are grouped into four clusters covering free float policy, transparency, governance and enforcement, and cross-agency synergy. Key actions include raising the minimum free float requirement for listed issuers to 15% from 7.5% on a phased basis, with new initial public offerings expected to meet 15% immediately and existing issuers given a transition period. Other actions include strengthening the role of domestic institutional investors and broadening the investor base, tightening transparency requirements on ultimate beneficial owners and shareholder affiliations, and improving the granularity and reliability of share ownership data with investor sub-type classification, with PT Kustodian Sentral Efek Indonesia to provide the data to the Indonesia Stock Exchange for publication. Governance and enforcement plans include preparing for the demutualisation of the Indonesia Stock Exchange to reduce conflicts of interest, strengthening enforcement and sanctions for market misconduct including transaction manipulation and misleading information, and raising issuer governance expectations via continuing education for boards and audit committees and certification requirements for preparers of issuers’ financial statements. OJK indicated the higher free float requirement would be set in the near term and implemented in stages, and it will continue discussions with the government and the Indonesia Stock Exchange to prepare for demutualisation.