OJK Plans Significant Increase in Minimum Public Ownership Requirement

Enhanced Market Liquidity Objective

The Financial Services Authority (OJK) is moving forward with plans to increase the minimum public ownership requirement, known as free float, to 25% for companies listed on the Indonesia Stock Exchange (IDX). This regulatory push aims to boost market liquidity and create a more inclusive investment environment. According to Parto Kawito, Director of Infovesta Utama, increasing the free float will require additional investment from investors. While higher free float can lead to greater market activity, it also means that companies need to ensure there is sufficient demand for their shares.

Impact on IPO Participation and Market Dynamics

The proposed increase to 25% free float is expected to have significant implications for Initial Public Offerings (IPOs). On one hand, a larger free float provides more opportunities for individual investors to purchase shares during IPOs, potentially leading to broader share ownership. On the other hand, if the influx of funds into the stock market remains limited, it might restrict the number of shares that can experience price appreciation.

Market Expert Perspective

Industry experts believe that while the increased free float requirement presents challenges, it also offers opportunities for market growth. The measure is seen as a step towards creating a more vibrant and inclusive stock market. By potentially increasing the availability of shares for public investment, OJK aims to deepen the Indonesian capital market and enhance its attractiveness to both domestic and international investors.