Flooring Guide by Cinvex – JAKARTA — The Indonesia Stock Exchange (IDX), in collaboration with the Financial Services Authority (OJK), is currently reviewing proposed amendments to public share ownership, commonly known as free float regulations, applicable to the Indonesian stock market.
Budi Frensidy, a Capital Market Observer from the University of Indonesia, observes that the market is adequately prepared for a revision of the free float threshold from the current 7.5% to 10%. He believes that a free float of 10% would be an ideal figure, especially for big-cap issuers.
“However, a forced increase to 15% in the near term would find the market ill-prepared,” Budi stated on Thursday, December 4, 2025.
Budi further elaborated that if the free float were to be mandated at 15% in the immediate future, an additional IDR 200 trillion (approximately USD 12.8 billion) would need to be absorbed by the market. He highlighted that this amount is substantial, particularly when juxtaposed with the IDX’s daily transaction target of merely IDR 14.5 trillion (approximately USD 930 million).
OJK Unveils Draft Revision of Free Float Rules Based on Market Capitalization
Previously, Mahendra Siregar, Chairman of the OJK Board of Commissioners, conveyed that the OJK views the strengthening of the free float policy as a strategic move towards market deepening. This initiative aims to ensure the capital market not only continues its growth trajectory but also becomes profoundly deeper, more liquid, and of superior quality.
“Equitable liquidity, he asserted during a meeting with Commission XI of the House of Representatives on Wednesday, December 3, 2025, forms the bedrock for establishing fairer pricing and fostering a more credible market.”
Based on OJK data, the average free float level for issuers on the Indonesia Stock Exchange stands at 23.9%, notably the lowest compared to other regional countries. For instance, the Philippines records 41.18%, Thailand 45.98%, Malaysia 46.99%, Vietnam 50.96%, and Singapore 68.92%.
Mahendra pointed out that this disparity leads to trade being heavily concentrated among a limited number of large-cap issuers, while the majority of other issuers contend with low liquidity, wide bid-ask spreads, and minimal investor participation.
“To address this, OJK is devising a free float policy based on two primary approaches: initial free float and continuous free float,” he explained.
Inarno Djajadi, Chief Executive of the OJK’s Capital Market, Derivative Financial, and Carbon Exchange Supervision, stated that his team has conducted calculations regarding the estimated additional capital the market would need to absorb should the free float obligation be raised to certain thresholds.
“If we increase it to 10%, approximately IDR 21 trillion (approximately USD 1.3 billion) in funding would be required. Furthermore, an increase to 15% would necessitate around IDR 203 trillion (approximately USD 13 billion). Therefore, several strategic options are currently under comprehensive discussion,” Inarno affirmed during a session at the House of Representatives on Wednesday, December 3, 2025.
OJK: 10% Free Float Increase Requires IDR 21 Trillion Funds
Inarno further indicated that under a mandated 10% free float requirement, 751 issuers would meet this condition, while 192 issuers would not. If the free float were to be elevated to 15%, only 616 issuers would satisfy the requirements, leaving 327 non-compliant.
Considering these scenarios, the OJK recognizes the necessity of a transitional period for the implementation of new free float regulations.
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Summary
The Indonesia Stock Exchange (IDX) and the Financial Services Authority (OJK) are reviewing proposed amendments to the free float regulations in the Indonesian stock market. Capital Market Observer Budi Frensidy believes the market is prepared for an increase from 7.5% to 10%, particularly for big-cap issuers. However, he warns that a mandated 15% increase would require the market to absorb an additional IDR 200 trillion (approximately USD 12.8 billion), for which it is currently ill-prepared.
OJK Chairman Mahendra Siregar emphasizes that strengthening the free float policy is crucial for market deepening, liquidity, and fairer pricing, noting Indonesia’s average free float of 23.9% is the lowest in the region. OJK calculations show that increasing the free float to 10% would require IDR 21 trillion (approximately USD 1.3 billion) in funding, while a 15% target would necessitate IDR 203 trillion (approximately USD 13 billion). Recognizing that many issuers would not comply with a higher threshold, OJK plans a transitional period for implementing new regulations.