Indonesia’s financial regulator said on Tuesday that it expects up to 75% of the companies listed on the country’s stock exchange to meet a new 15% free-float requirement within the first year of implementation.
Hasan Fawzi, interim chief capital market supervisor at the Financial Services Authority, said companies may be given different deadlines of one, two, or three years to comply with the requirement.
Indonesia is implementing a series of capital market reforms after index provider MSCI warned the Southeast Asian country 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 based on their readiness to offer more stocks to meet the 15% free-float rule, with the first batch to be granted one year to comply and the second given two years.
“We will see that around 70-75% of our issuers are likely to have reached the minimum target of 15% by the end of the first year,” Hasan told reporters. As of now, around 60% companies have reached the 15% mark, he added.
After three years, the regulator will prepare an exit policy for those companies that failed to meet the requirement, Hasan said without elaborating further. He reiterated that the policy will be adjusted to account for the capacity of the market.
OJK met with Fitch Ratings representatives last week as part of their annual assessment, with both sides discussing Indonesia’s programme to reform its capital market and support the national economic agenda.
Reuters
