IDX Strives for Transparency, Plans to Revise Pre-Closing Trading
Jakarta. Indonesia Stock Exchange, IDX, is planning to revise its pre-closing procedures to increase stock trade transparency, bourse chief said on Friday (10/02).
In the past three months, the IDX has noticed an increasing number of marking the close of the market practices — investors buying stocks at the end of the trading day at significantly higher or lower prices — which might indicate attempts of certain parties to manipulate the market.
On Friday, pre-closing trading at IDX occurred 10 minutes before the trading ended at 4.00 p.m.
While investors are still able to bid during the period, the stock prices are determined based on the largest transaction, instead of a continuous auction like in the regular trading period. This happens automatically in the background and traders cannot see the stock price movement.
The bourse is considering to allow the investors to see the price movement during the session.
"We are currently discussing a revised mechanism with the Association of Indonesian Securities Trading [APEI]," IDX president director Tito Sulistyo said, adding that the APEI also wants the trading to be more open.
He said that several stock exchanges in Asia, including Malaysia, Hong Kong and Singapore, have already implemented transparent pre-closing trading.
IDX might also follow the Thailand bourse, which closes randomly between 4.30 and 4.40 p.m, but this kind of a closing mechanism needs the approval of the Financial Services Authority (OJK).
IDX implemented pre-closing trading on Jan. 2, 2013. The bourse processes the pre-closing transaction prices from 4.01 to 4.05 p.m., while post-closing trading ends between 4.05 p.m. and 4.15 p.m.