Indonesia bourse to issue new regulations on margin trading in Feb

JAKARTA (REUTERS) - The Indonesia Stock Exchange (IDX) will issue new regulations in February to expand margin trading on the bourse, a senior official at the country's capital market regulator told reporters on Monday.

The move will expand the number of stocks available for margin trading to 179 from 57 currently, and also provide trade financing facilities to certain brokers, according to Nurhaida, capital market supervisor at Financial Services Authority.

"There are two things we want to achieve here: increase the (volume of) transactions at the exchange and incentivise brokers to improve their net adjusted working capital," Ms Nurhaida said, referring to brokers' capital adequacy level.

The exchange expects these measures to help increase transaction volume by 30 per cent. The stock exchange is currently revising the criteria for margin trading stocks, said IDX chief executive Tito Sulistio.

Brokers with net capital above 250 billion rupiah (S$26.7 million) will be allowed to conduct margin trading in all available stocks, while those with capital below 250 billion rupiah would only be allowed to do so in 45 stocks.

The IDX has is also planning to create a securities financing agency to help fund stock trading, Mr Sulistio said. The agency will provide up to 100 billion rupiah of financing to brokers that meet the regulator's criteria.