Compliance Related to Stock Trading Transactions on the Indonesia Stock Exchange

Regulations are created to be adhered to and followed as guidelines to ensure proper conduct and reduce risks arising from mistakes made by one or more individuals. Mistakes that occur due to non-compliance with regulations can lead to situations not proceeding as they should and may result in losses for both oneself and others. The Indonesia Stock Exchange (IDX) has a set of rules and procedures that must be followed by parties wishing to conduct stock trading transactions because the buying and selling process involves multiple parties and can have both positive and negative impacts on those involved. Therefore, the parties involved in stock trading transactions on the IDX are obliged to comply with the regulations established by the IDX to ensure that transactions run smoothly without any obstacles, as they should. To enhance compliance among the transacting parties, regulations that bind the parties and sanctions appropriate to the offenses committed by the parties are necessary to support the orderly, fair, and efficient conduct of stock trading activities.

As a registered Capital Market Legal Consultant with the Financial Services Authority (OJK) and Managing Partner at WNPASIA Law Firm, Indra K. Wardani stated that:

The OJK has the function of implementing an integrated regulatory and supervisory system for all activities in the financial services sector, including the capital market. The OJK began functioning on December 31, 2012, and replaced the regulatory role of the Capital Market and Financial Institutions Supervisory Agency (BAPEPAM-LK).

he IDX also implements Good Corporate Governance (GCG) to manage companies professionally based on the principles of transparency, accountability, responsibility, independence, fairness, and equality. The mission of the IDX is to create a reliable and credible financial market infrastructure to realize an orderly, fair, and efficient market that is accessible to all stakeholders through innovative products and services. The IDX has the following objectives in implementing GCG:

1. As a guideline for the Board of Commissioners in supervising and providing advice to the Board of Directors in managing the Company.
2. As a guideline for the Board of Directors to maintain high moral values by considering the Articles of Association, business ethics, laws, and other regulations.
3. As a guideline for the IDX management and employees in carrying out their daily activities and duties in accordance with Corporate Governance (CG) principles.

The IDX has strategies to ensure GCG is well implemented, such as:

1. Consistent implementation of governance guidelines, charters, and procedures. The IDX regularly reviews governance guidelines, charters, and procedures to improve quality and deliver better performance, including:

• Corporate governance guidelines that integrate GCG into the company’s mission so that corporate organs (GMS, Board of Commissioners, and Board of Directors) can function effectively.
• Conduct guidelines by applying a Code of Conduct to build a culture that upholds teamwork, integrity, honesty, independence, quality, responsibility, and professionalism among all IDX personnel.
• The Board of Commissioners and Board of Directors charters are GCG documents that explain the roles of the Board of Commissioners and the Board of Directors, as well as the relationship between them, which can enhance the value, performance, and reputation of the IDX.
• Committees and committee charters that assist in providing advice and input to the Board of Commissioners and the Board of Directors in carrying out their roles, duties, and responsibilities. Committee charters outline the committee’s organization, including member requirements, appointment and tenure, ethical standards, etc.
• GCG support organs such as the Internal Audit Unit (SPI), which provides independent and objective audit and consulting services to enhance risk management effectiveness, internal control, and CG processes. The Corporate Secretary interacts with shareholders and other stakeholders, maintains the company’s image, and acts as the custodian of company documents. Risk management is implemented to safeguard the company’s business activities from causing losses beyond the company’s capacity or threatening business continuity.

1. Continuous dissemination of CG principles.

Socialization to all employees and stakeholders aims to instill CG principles so that employees consistently comply with CG provisions when conducting company operations.

1. Third-party assessment of CG implementation at the IDX to improve CG quality.
2. Management system certification.

The Financial Services Authority Regulation (POJK) No. 22/POJK.04/2019 on Securities Transactions explains that the stock exchange must have regulations that include provisions and requirements for each market type in stock exchange transactions, where the regulations must include:

1. When the contract becomes binding;
2. Provisions regarding the date for the settlement of stock exchange transactions;
3. Provisions regarding the rights of stock exchange members; and
4. Provisions on the deadline and types of information that can be corrected in stock exchange transactions.

The stock exchange may prohibit its members from conducting securities transactions outside the stock exchange for securities listed on the stock exchange. Additionally, the stock exchange is prohibited from creating regulations that prohibit or hinder securities companies, issuers, securities administration bureaus, or other parties from:

1. Transferring securities from one securities account to another at or between custodian banks or securities companies;
2. Transferring securities in the name of a securities company, clearing and guarantee institution, or securities financing institution for use as collateral;
3. Transferring securities in connection with off-exchange securities transactions for securities listed on the stock exchange;
4. Registering securities obtained through off-exchange transactions;
5. Requiring that securities transfers be based on stock exchange transactions.

Stock exchange transactions become binding when buy and sell orders and offers to sell securities, buy-sell agreements, or agreements on other contracts between stock exchange members meet through the stock exchange trading system.

There is a Cooperation Agreement between the Secretariat General of the Business Competition Supervisory Commission and PT Indonesia Stock Exchange regarding the Enhancement of Compliance with Business Competition Law and Monitoring of Partnership Implementation in the Capital Market Sector in 2020. This agreement serves as a foundation for cooperation, coordination, and synergy between KPPU and the IDX to enhance compliance by businesses in the capital market sector with prohibitions on monopolistic practices and unfair competition, as well as prohibitions on partnership implementation. Through socialization or dissemination and/or compliance classes for IDX members, listed companies, and IDX employees, the desire to comply with regulations can be increased and the occurrence of undesirable events can be reduced.

The Board of Directors of PT IDX issued a Decision Letter regarding the Amendment of Regulation No. I-V on Special Provisions for Listing Shares and Equity Securities Other Than Shares Issued by Listed Companies on the Acceleration Board, which includes regulations on general listing provisions, initial listing requirements, initial listing procedures, requirements for listed companies to remain listed on the Exchange, board transfers, listing fees, reporting obligations, sanctions for companies that violate regulations, and re-listing. The annex to the decision letter includes a compliance statement with IDX regulations that must be completed by the listed company and submitted to the Director of Company Valuation at PT IDX.

With the presence of OJK and IDX, which are responsible for regulating and supervising the conduct of stock trading transactions, the quantity and quality of compliance with related regulations have increased, reducing the risk of losses for the parties involved. Investors and issuers must comply with regulations established by OJK, IDX, and other institutions to ensure that stock trading activities are conducted in an orderly, fair, and efficient manner as desired by all parties.