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IDX to Implement T+2 Settlement


On the 26th of November 2018, Indonesia Stock Exchange (IDX) has implemented T+2 settlement for the first time ever, faster than its latest settlement of 3 days or T+3. Socialization and preparation have been outstandingly organized numerous times, as well as other testing methods. The three self regulatory organizations which consists of IDX, Indonesia Central Securities Depository, and Indonesia Clearing and Guarantee Corporation have effectively thought of contingency plans and alternative solutions for any undesirable scenarios that may happen in the future.

The implementation of T+2 settlement will possibly increase settlement and transaction activities by 30%, which will also potentially increase the value of daily settlements from Rp8,3 billion to Rp11 billion. Moreover, the direct impact of this system change is the allowance for adjusted networking capital of the members of the stock exchange. From a technical perspective, all contributing parties must highly prepare for smooth running of the system. According to Aria Santoso, an expert of the capital market, this system may not be favorable for individuals applying leverage in short term. However, the timing of this new system implementation is thought to be perfect because the market will receive assistance from the window dressing cycle that happens every end of a year. The window dressing cycle helps increase performance of stocks, in turn of helping people to enter the market.

In addition, IDX has officially perfected methods of index LQ45 and IDX30 by implementing the free float market. This newly improved method is proven to be an upgrade from the last method of capitalization-weighted index. Specifically, on the upcoming month February of 2019, the method that will be implemented is the free float adjusted index. With this method, the maximum weight of a stock in the index will be limited to 15% and the LQ45 and IDX30 index will be evaluated every 3 months. Hopefully, the improved method will be able to reduce the dominance of a stock in calculating the index.


Sources:

Bisnis Indonesia

CNBC Indonesia


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