IDX Prepares to Introduce Short Selling in March
Jakarta. The Indonesia Stock Exchange (IDX) is set to launch short selling and intraday short selling in March 2025 to provide investors with more strategies in the current volatile global market conditions.
Jeffrey Hendrik, Director of Development at IDX, said ongoing trade tariff policies between the United States and China, as well as with countries like Canada and Mexico, have contributed to global uncertainty.
US President Donald Trump has delayed the imposition of a 25 percent tariff on Canada and Mexico for 30 days. Meanwhile, a 10 percent additional tariff on all Chinese imports to the US came into effect on Feb. 4.
"This new product is expected to offer investors additional strategic options, especially during periods of high market volatility," said Jeffrey in Jakarta on Thursday.
According to Jeffrey, the finalization process for granting licenses to exchange members offering short-selling services is ongoing, with the instrument expected to be launched by March or early in the second quarter of2025.
"With this new strategy, investors are expected to better manage their portfolios amid dynamic and challenging market conditions," he added.
Short selling is an investment strategy in which an investor borrows shares from a broker and sells them, hoping the stock price will fall. The investor then repurchases the shares at a lower price to return them to the broker, profiting from the difference.
IDX outlined the distinction between regular short selling and intraday short selling (IDSS). In regular short selling, investors can hold their short position for several days or more. However, in IDSS, the position must be closed on the same day before the market closes.
The Indonesian Ulema Council (MUI) has ruled that short selling is haram (forbidden under Islamic law). Jeffrey explained that several IDX products and services, like derivative products, margin trading, and trading limits, have not been reviewed for Sharia compliance by the MUI. "If you use another term, yes, it’s haram," he said in June 2024.
Jeffrey added that individual investors are left to decide to engage in transactions involving these IDX products.
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