New Auto Rejection Limit Sets by IDX



The Indonesian Stock Exchange (Bursa Efek Indonesia, hereinafter IDX), through its board of directors’ decree number Kep-00113/BEI/12-2016 regarding the amendment of Rules Number li-A on the Equity Securities Trading (hereinafter IDX Decree 113/2016), has decided to set a new limitation for auto rejection system. The IDX Decree 113/2016 was issued on December 13, 2016 and came into force on January 3, 2017. Before IDX Decree 113/2016, the auto rejection limitation sets by IDX board of directors decree number Kep-00096/BEI/08-2015 dated August 24, 2015 (hereinafter IDX Decree 96/2015). The changes of auto rejection limitation made by IDX conducted by taking into account the development of trading in IDX and aiming at maintaining the organized, fair and efficient stock trading.

Auto Rejection in General

Rules number II-A regarding the Equity Securities Trading explains Auto Rejection as an automatic rejection by IDX’s current securities trading system (Jakarta Automated Trading System or JATS) to the selling offer and/or purchase request of equity securities because the price or the amount of the equity securities exceeding the limit sets by the IDX. JATS specifies the price range for equities’ selling offer and purchase request into its system. If any IDX members input the offering and/or purchasing price outside the specified price, JATS will automatically reject it by applying the auto rejection system. Hence, this auto rejection system will keep the securities trading to become fair and efficient.

The Chances of Auto Rejection Limit

The IDX Decree 113/2016 sets a symmetrical auto rejection limitation, by applying the same ceiling and floor limit for each stock price range. The ceiling and floor limits for stock prices that range from Rp 50 to Rp 200 are equally set at 35%; stock prices that range from Rp 200 to Rp 5,000 has an equal ceiling and floor limits, set at 25%; and the ceiling and floor limits for stock prices above Rp 5,000 are equally set at 20%.

Previously, the IDX Decree 96/2015 applied an asymmetrical ceiling and floor limits for each range of stock prices, which are 35% ceiling limit and 10% floor limit for stock prices that range from Rp 50 to Rp 200; 25% ceiling limit and 10% floor limit for stock prices ranging from Rp 200 to Rp 5,000; and 20% ceiling limit and 10% floor limit for stock prices above Rp 5,000.

The above auto rejection limitations has been approved by the Financial Service Authority (Otoritas Jasa Keuangan, hereinafter OJK) through its deputy commissioner of capital market supervisory II decree number 5-163/PM.2/2016 dated November 30, 2016 regarding the approval of the draft of rules number II-A on the Equity Securities Trading.

The table below show the changes of the auto rejection limits before and after January 3, 2017:

Price Range Before January 3, 2017 After January 3, 2017
Ceiling Limit Floor limit Ceiling Limit Floor Limit
Rp 50 — Rp 200 35% 10% 35% 35%
Rp 200— Rp 5,000 25% 10% 25% 25%
> Rp 5,000 20% 10% 20% 20%