JAKARTA — The Financial Services Authority (OJK) has officially sanctioned an increase in the minimum free float threshold to 15%, a move widely perceived as a pivotal structural step designed to mitigate liquidity discounts prevalent in the Indonesia Stock Exchange (IDX).
Nafan Aji Gusta Utama, Senior Market Analyst at Mirae Asset Sekuritas Indonesia, elaborated that this elevated threshold is expected to deliver a substantially positive impact on overall market depth.
He noted that a larger proportion of publicly traded shares should inherently narrow the bid-ask spread, fostering a more efficient pricing mechanism within the market.
“This policy is exceptionally positive for our market’s liquidity, primarily by boosting the supply of shares in the secondary market,” Nafan stated when contacted on Thursday, March 26, 2026. “It will effectively diminish the ‘tight float’ phenomenon, which often leads to volatile price movements even with minimal order volumes.”
Nafan further added that a 15% public float will catalyze a more efficient price discovery process. He believes that broader public investor participation will also significantly curb the potential for price manipulation by majority shareholders, ensuring that stock movements more accurately reflect underlying fundamentals.
Nevertheless, Nafan acknowledged the potential for short-term selling pressure, particularly for small-to-mid capitalization (small-mid cap) issuers whose current public float percentage remains below the newly mandated requirement.
He anticipates that the market will likely begin to factor in these changes well before issuers undertake corporate actions – such as divestments, private placements, or secondary offerings – to comply with the updated regulation.
“Such price pressure is a normal, temporary phenomenon directly linked to the increased supply,” he explained. “However, once this adjustment phase concludes and companies maintain solid fundamentals, these stocks are poised to become significantly more attractive to market participants.”
Furthermore, Nafan underscored that this elevated free float acts as a crucial gateway, enabling Indonesian issuers to enter the radar of prominent global institutional investors.
The availability of publicly traded shares is, after all, a critical component in the weighting adjustments for prestigious global indices like MSCI and FTSE.
“The increase in free float opens up opportunities for enhanced weighting in global indices,” Nafan stated. “Once issuers become eligible, we anticipate a significant surge in foreign capital inflows. This could also lead to a re-rating of issuer valuations, as liquidity discounts diminish and transform into a premium liquidity status.”
From a governance perspective, this regulation is also expected to bolster transparency and fairness for retail investors. With less dominant controlling shareholders, the credibility of Indonesian issuers in the eyes of global investors is anticipated to be significantly enhanced.
It is worth noting that the OJK officially approved amendments to Regulation 1-A, as proposed by the IDX. A key aspect of this revision is the escalation of the minimum public share ownership, or free float, to 15% for listed companies.
Hasan Fawzi, Chief Executive of Capital Market, Derivatives, and Carbon Exchange Supervision at OJK, confirmed that the approval was granted to the exchange, albeit with certain adjustment notes.
“We have just approved Regulation 1-A today, with certain caveats, as the exchange had already proposed amendments to Regulation 1-A. One of its core provisions is the gradual increase of the minimum free float to 15%,” Hasan stated in Jakarta on Wednesday, March 25, 2026.
Hasan further elaborated that this new regulation is targeted to become effective before the end of March 2026. He assured that the fulfillment of the 15% threshold would not be imposed abruptly but rather through carefully measured, progressive stages.
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