Indonesia Exchange Adds Independent Experts to Shareholding Oversight Panel

Indonesia's stock exchange has expanded the committee responsible for reviewing companies with highly concentrated share ownership, bringing in independent market specialists and academics as the country seeks to strengthen investor confidence after a sharp market selloff.

Exchange chief Jeffrey Hendrik described the changes at a press conference in Jakarta on Monday, October 26. Indonesian financial publication Infobank reported that the committee will have nine members: four drawn from exchange and market infrastructure bodies and five external participants. The external members include securities-industry representatives and academics.

The committee examines high shareholding concentration, or HSC, a condition in which a relatively small number of holders control much of a listed company's shares. Such structures can limit the volume available for public trading and increase the risk of abrupt price moves. Being classified as HSC is not, by itself, a finding of illegal trading.

Reuters, in reporting carried by Kontan, separately confirmed the decision to add independent observers and said the exchange would begin investigations when it detects possible attempts to manipulate share prices, rather than relying solely on warnings. The exchange had previously announced plans to remove highly concentrated shares from the calculation of its main Jakarta stock index from November 2. Those companies would not automatically be delisted.

The changes follow concerns raised by index provider MSCI about market transparency and coordinated trading. A potential downgrade of Indonesia's market classification remains a possibility rather than a final decision. Regulators say the reforms are intended to improve market supervision and transparency; their effectiveness will depend on implementation.