Rancak Media – JAKARTA — The Indonesia Stock Exchange (IDX), in collaboration with the Financial Services Authority (OJK), is currently evaluating proposed changes to the regulations governing public share ownership, commonly known as the free float, within the Indonesian capital market.
Budi Frensidy, a Capital Market Observer from the University of Indonesia, noted that the market appears ready for a free float adjustment from the current 7.5% to 10%. He believes that a 10% free float for big-cap issuers would be an ideal scenario. However, Budi cautioned on Thursday (4/12/2025) that the market is “less prepared if it’s forced to 15% in the near future.”
He elaborated that if the free float were to be mandated at 15% soon, the market would need to absorb an additional approximately IDR 200 trillion. Budi emphasized the significant scale of this figure, especially when considering the Stock Exchange’s daily transaction target of just IDR 14.5 trillion.
Previously, Mahendra Siregar, Chairman of the OJK Board of Commissioners, stated that the OJK views strengthening free float policies as a strategic move to deepen the capital market. This initiative aims to ensure the market not only continues to grow but also becomes more profound, liquid, and of higher quality.
During a meeting with Commission XI of the House of Representatives on Wednesday (3/12/2025), Mahendra underscored that “equitable liquidity forms the foundation for more reasonable price discovery and a more credible market.”
OJK data reveals that the average free float level for issuers on the Indonesia Stock Exchange stands at 23.9%. This figure is notably the lowest compared to other countries in the region, including the Philippines (41.18%), Thailand (45.98%), Malaysia (46.99%), Vietnam (50.96%), and Singapore (68.92%).
Mahendra highlighted that this situation leads to trading being heavily concentrated in a small number of large issuers. Conversely, the majority of other issuers experience low liquidity, wide spreads, and minimal investor participation, hindering overall market dynamism.
“To address this,” he explained, “the OJK is developing its free float policy with two primary approaches: initial free float and continuous free float.”
Inarno Djajadi, the OJK’s Executive Head of Capital Market, Derivative Finance, and Carbon Exchange Supervision, detailed that his team has calculated the estimated additional value the market would need to absorb if the free float requirement were raised to specific thresholds.
“If we increase it to 10%, approximately IDR 21 trillion in funding would be required. If we raise it to 15%, about IDR 203 trillion would be needed,” Inarno stated at the DPR on Wednesday (3/12/2025). “Consequently, several strategies are currently under discussion to manage these potential impacts.”
Inarno further noted that, under a 10% free float obligation, 751 issuers currently meet this requirement, while 192 issuers do not.
Should the free float be increased to 15%, only 616 issuers would satisfy the criteria, leaving 327 that would not.
Given these scenarios, the OJK recognizes the necessity of a transition period for implementing the new free float regulations effectively.
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Summary
The Indonesia Stock Exchange (IDX) and the Financial Services Authority (OJK) are evaluating proposed changes to free float regulations to deepen and improve the liquidity and quality of the capital market. This initiative aims to strengthen policies that ensure equitable liquidity and more reasonable price discovery. Currently, Indonesia’s average free float level is 23.9%, which is the lowest in the region and contributes to concentrated trading among large issuers while others face low liquidity.
Market observers suggest the market is ready for a 10% free float for big-cap issuers but less prepared for a rapid increase to 15%, which would require absorbing an additional IDR 200 trillion. OJK data indicates that raising the free float to 10% would need IDR 21 trillion, while 15% would require IDR 203 trillion. The OJK is developing initial and continuous free float policies and acknowledges the necessity of a transition period for effective implementation, given that a significant number of issuers currently wouldn’t meet higher requirements.
