Jakarta's stock exchange plans to remove the 50 rupiah price floor

The Indonesia Stock Exchange plans to scrap the rule that no listed share may trade below 50 rupiah, about 28 US cents. Nikkei Asia reports that IDX president director Jeffrey Hendrik said the change is meant to improve liquidity and let prices better reflect what the market thinks companies are worth.

Both of those words are doing real work. A price floor is the lowest price a share is allowed to change hands at, so when investors decide a company is worth less than 50 rupiah, the price cannot fall to meet them. Sellers queue at the floor and nobody takes the other side, and the stock stops trading in any useful way. Liquidity means how easily you can buy or sell without pushing the price around. Price discovery means letting a market settle on the number people will genuinely pay. Taking the floor away restores both. It also means a cheap share can now keep falling.

Hendrik said the exchange has consulted the Association of Indonesian Securities Companies and the Indonesian Investment Managers Association, and has "also discussed the plan with global investors". He would not give details or a start date, and said IDX is still gathering feedback and checking whether its trading systems are ready. So this is a stated direction rather than a rule with a date on it.

Why it matters

If you hold a share that has been parked at 50 rupiah, this cuts both ways: the price can finally drop to whatever buyers think it is worth, and that is also the first realistic chance in a long time to sell it at all. Look at what you own before the rule lands, not after, and treat any holding that has sat at the floor for months as a valuation nobody has tested. The line about global investors is the tell on who this is for. IDX is trying to make the market look ordinary to foreign fund managers, and ordinary means prices that are allowed to be bad news.