Indonesia scraps minimum share price rule to boost market liquidity

Indonesia's Financial Services Authority (OJK) announced the decision to abolish the minimum share price floor, which had required listed companies to maintain stock prices at or above 50 rupiah per share. The regulation, which has been in place for years, was designed to prevent extreme penny stock trading but had increasingly become viewed as a constraint on market operations.

Regulatory officials cited improved market infrastructure and surveillance capabilities as justification for eliminating the outdated requirement. The removal is expected to allow smaller companies and those facing financial difficulties greater flexibility in restructuring their capital and continuing their public listings without artificial price supports.

The change reflects Indonesia's broader efforts to modernize its capital markets and align them with international standards. By removing the rigid minimum price floor, policymakers hope to encourage greater participation in equity markets and facilitate more efficient price discovery mechanisms.

The decision will take effect following a transition period to allow listed companies and market participants to adjust their operations accordingly. Industry observers expect the move could lead to increased market volatility in the short term, but may ultimately strengthen the exchange's competitiveness in the region.