Stock Market in Emergency, Exchange Temporary Suspension Rules and Stock ARB Changed

JAKARTA, KOMPAS — The Indonesia Stock Exchange responded to the emergency conditions in the global stock market in recent weeks. Facing the reopening of the stock market after a long holiday, Tuesday (8/4/2025), the exchange authorities also changed the provisions for implementing the temporary suspension of securities trading or trading halt on the exchange and reduced the percentage of the minimum limit for stock price declines or lower auto rejection or ARB.

The President Director of the Indonesia Stock Exchange (IDX), Iman Rachman, stated during a press conference at the Main Hall of IDX in Jakarta on Tuesday that, since March 27, global stock price indices have experienced a decline and price fluctuations ranging between 5-11 percent. This condition has become increasingly significant since the President of the United States (US), Donald Trump, announced an increase in import tariffs to the US for many countries, including Indonesia.

That condition, said Iman, was not experienced by the domestic stock exchange because trading was closed along with the joint leave of Eid al-Fitr. However, the IDX anticipated the global dynamics in the reopening of the stock market by changing two policies on the exchange. "The adjustments that we will make are related to two things, first ARB and trading halt where this is the first important mechanism to maintain market liquidity," he said.

This regulation is outlined in the Board of Directors' Decree of the Stock Exchange dated April 8, 2025, regarding the Amendment to Regulation Number II-A on Equity Securities Trading and the Board of Directors' Decree of the Stock Exchange regarding the Guidelines for Handling Trade Continuity on the Indonesia Stock Exchange in Emergency Conditions.

In detail, the adjustment of the ARB percentage limit has been revised to 15 percent from 35 percent for stocks on the main board, and the same percentage applies to stocks on the development board, which was previously 25 percent. Meanwhile, the ARB change to 15 percent from 20 percent applies to stocks on the new economy board.

The adjustment of the ARB percentage limit is also applied to the effects in exchange-traded fund (ETF) products and Real Estate Investment Trusts (REITs) for the entire price range.

The adjustment of policies related to the temporary suspension of securities trading is implemented when there is a sharp decline in the Composite Stock Price Index (IHSG) in a single trading day by more than 8 percent. This has been changed from the previous threshold of 5 percent. The temporary suspension of trading is carried out for 30 minutes.

If the JCI drops further by more than 15 percent, a 30-minute trading halt can be implemented again. This corrects the previous limit of 10 percent. Furthermore, the exchange has the right to freeze trading if the JCI drops by more than 20 percent, with the provision that it is carried out until the end of the trading session or more than one trading session after obtaining approval or an order from the Financial Services Authority (OJK).

This policy evaluation, Iman added, adjusts the practices of global stock exchanges, such as the South Korean and Thai Stock Exchanges. BEI, said Iman, has also conducted a mini survey of market players during the Eid holiday. "This adjustment is implemented to provide liquidity space for market players and investors to give them time to respond to information in the market," he said.

Currently, the global stock market is still dominated by corrections or declines. This condition has been evident two days after the announcement of Trump's policy on Wednesday (2/4/2025), which caused U.S. stock exchanges such as Nasdaq to plummet by 11.4 percent, the Small Cap 2000 Index to drop by 10.7 percent, the S&P 500 to weaken by 10.5 percent, and the Dow Jones to correct by 9.3 percent.

This trend has spread to stock exchanges in other developed and developing countries. The MSCI World Index, for instance, fell by 9.3 percent, Italy's FTSE MIB corrected by 9.9 percent, Germany's DAX weakened by 7.8 percent, and the Euro Stoxx 50 Index and the UK's FTSE 100 each dropped by 8.3 percent and 6.4 percent, respectively.

Meanwhile, last weekend, the response of the Asian regional market tended to vary. Japan's Nikkei 225 index fell by 5.5 percent, South Korea's KOSPI weakened by 1.6 percent, and Australia's ASX corrected by 3.4 percent. The Chinese market was relatively more stable, with the Shanghai Composite only declining by 0.4 percent and the China A50 remaining nearly stagnant.

Meanwhile, on Monday's trading (7/4/2025), the Asian market plunged further. Japan's Nikkei 225 until midday Western Indonesia Time was corrected by 7 percent, the Shanghai Stock Exchange was negative 6.34 percent, the Hong Kong 50 Stock Index plunged 10 percent, and Australia's ASX was corrected by almost 5 percent.

Capital market analyst from PT Infovesta Utama, Wawan Hendrayana, when contacted on Monday (7/4/2025), said that the market had lost hope for negotiations from developing countries, especially Asia, with the US government approaching the time of implementing tariff changes, Wednesday (9/4/2025).

"Therefore, the market is preparing for the tariffs to come into effect, volatility will be high because some investors choose to sell their shares first and enter those that are considered safer," he said.

This situation, according to him, will also have an impact on the movement of the JCI which had strengthened to the level of 6,510 before the long Eid holiday. "The JCI will most likely open with a correction, although hopefully it will not reach a trading halt," said Wawan.