Indonesia regulator expects 75% of listed firms to meet 15% free-float rule within first year

[JAKARTA] Indonesia’s financial regulator said on Tuesday (Mar 3) that it expects up to 75 per cent of the companies listed on the stock exchange to meet a new 15 per cent free-float requirement within a year of the changes to the capital market rules.

Hasan Fawzi, interim chief capital market supervisor at Indonesia’s financial services authority (OJK), said companies may be given different deadlines of one to three years to comply with the requirement.

The South-east Asian country is implementing a series of capital market reforms, after index provider MSCI warned it in January that transparency issues put it at risk of being downgraded to frontier market status by as early as May.

Reuters has previously reported that the bourse may divide companies into two batches. It will be based on their readiness to offer more stocks to meet the 15 per cent free-float rule.

The first batch will be granted one year to comply – and the second, two years.

“We will see that around 70 to 75 per cent of our issuers are likely to have reached the minimum target of 15 per cent by the end of the first year,” Hasan told reporters.

As of now, around 60 per cent of companies have reached the 15 per cent mark, he added.

After three years, the regulator will prepare an exit policy for those that failed to meet the requirement, he said, without elaborating further.

He reiterated that the policy will be adjusted to account for the capacity of the market.

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OJK met with Fitch Ratings representatives sometime during the last week of February, as part of an annual assessment.

Both sides discussed Indonesia’s programme to reform its capital market and support the national economic agenda. REUTERS