Indonesia‘s financial regulator will double the capital requirement threshold for securities firms and certain asset managers to reduce risks of stock market manipulation, an official told Reuters on Thursday.
The move is part of broad capital market reforms by Indonesian authorities aimed at assuaging investor concern over the transparency of its stock market after global index provider MSCI in January flagged investability risks in Southeast Asia’s largest economy.
“Stronger capital firms can engage in all activities, while those with limited capital will only be allowed to engage in certain activities, so risks can be better managed,” said Eddy Manindo Harahap, a deputy commissioner for capital market investment management supervision at the Financial Services Authority (OJK) in an interview on Thursday.
He did not provide a date for the implementation of the new rules, but said they would come into force “soon”.
In a presentation of the new rules seen by Reuters, securities or brokerage firms and asset managers offering products such as mutual funds will be divided into three and two tiers, respectively, based on capital strength and permitted business activities.
The lowest tier of securities firms must have paid-up capital of 1 billion rupiah ($58,326.04), double the current requirement of 500 million rupiah. The highest tier requires at least 110 billion rupiah. For asset managers, OJK will double the capital required for full-range firms to 50 billion rupiah and a minimum assets under management of 1 trillion rupiah.
The highest type of asset manager will be able to manage all types of investment products, including offshore mutual funds, but OJK would require this kind of firm to have more specific departments, such as a dedicated internal audit division.
On top of capital requirements, Eddy also said they will impose a stricter requirement for certain securities firms to have a compliance unit, which he said will help prevent the occurrence of market manipulation.
Between 2022 and 2025, nearly a quarter of parties penalized for a stock market offense related to market manipulation were either securities firms or the leaders of those firms, OJK data showed.
Reuters
