Jakarta. The Indonesia Stock Exchange (IDX) began implementing the second phase of its Full Call Auction (FCA) policy on March 25 to enhance investor protection. However, the policy has sparked more controversy than anticipated.

The most recent example involves the stock of Barito Renewables Energy (BREN).

Trading of BREN stock resumed on Wednesday after a two-day suspension. On the same day, BREN stock was placed on the IDX’s special monitoring board, where the FCA policy applies for 30 days, requiring periodic auctions in five sessions a day.

As a result, BREN shares fell by 10 percent to Rp 10,125 per share, triggering the circuit breaker due to the limit-down rule. BREN’s market capitalization also dropped significantly from Rp 1,505 trillion ($92.8 billion) to Rp 1,354 trillion. The composite share price index of the IDX contracted by 1.56 percent to 7,140 that day.

The FCA policy’s imposition on BREN stock drew strong reactions from investors, especially since it came shortly after the company was officially included in the Financial Times Stock Exchange (FTSE) Global Equity Index under the large-cap category, effective from June 2024.

“BREN’s inclusion in the FTSE reflects growing demand from foreign investors to buy its shares. However, the stock was suspended and then put under the FCA, leaving us confused,” said Kiswoyo Adi Joe, head of Investment at Nawasena Abhipraya Investama.

Kiswoyo said the FTSE Global Equity Index is a crucial benchmark for global investors, covering 19,000 public companies from 49 countries, including emerging markets.

“Getting listed on the FTSE index is a significant achievement, and the requirements to get there are very stringent,” Kiswoyo added. He said he believes the influx of foreign investors benefits local retailers and helps stabilize share prices.

According to Kiswoyo, the FCA policy is premature and unnecessary for the IDX at this time.

“If the goal is to protect investors, it would be better to impose stricter requirements from the outset. For example, a company should be required to book a profit for the last three years to be eligible for an IPO,” he suggested.

Investor Reaction
Several investors have complained that the FCA policy implementation deprives companies on the special monitoring board of the ability to make bid offers, making the equity market more unpredictable.

Some investors mentioned difficulties in reaching a consensus on agreed prices, forcing them to sell stocks at a loss.

On the other hand, the IDX argues that the FCA policy allows for a fairer formulation of share prices and protects investors from aggressive market orders.

IDX Trading and Membership Director Irvan Susandy tried to downplay the impact of the FCA policy.

“It’s normal to experience minor turbulence in response to market dynamics. I believe the market will adjust itself to regional and global changes,” he said on Wednesday.

Separately, BREN Corporate Secretary Merly said BREN stock enjoyed a positive sentiment after its inclusion in the FTSE and the Exchange Traded Fund managed by Blackrock.

"Our company is committed to developing renewable energy in Indonesia, a sector that gains global attention and interest. We need to collaborate to develop this sector," Merly stated. “We understand investors’ growing demand for long-term possession of BREN shares, especially given the mandate for certain industries to invest in renewable energy.”

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