Indonesia Stock Exchange implements 30-minute trading halt

The Indonesia Stock Exchange (IDX) implemented a temporary trading halt on Apr. 8, after the Jakarta Composite Index (IHSG) dropped by 9.19% to 5,912.

The trading pause began at 9:00 am Jakarta Automated Trading System (JATS) time and resumed at 9:30 am, maintaining the regular trading schedule.

The IDX said that the halt was triggered after the IHSG fell by more than 8%, in accordance with its updated policy.

As of this morning, IDX data indicated a transaction value of 1.92 trillion rupiah (US$114 million), involving 1.59 billion shares across 64,620 transactions.

Nine stocks gained in value, 552 declined, and 65 remained unchanged. The IHSG’s market capitalization was recorded at 10,219 trillion rupiah (US$607.2 million).

🔗 Source: Katadata

🧠 Food for thought

A. Circuit breaker mechanisms reflect lessons from past market crises

Indonesia’s current trading halt system shows a significant evolution from previous market protection measures.

The recent adjustment raising the IHSG decline threshold from 5% to 8% for trading halts and from 15% to 20% for full suspensions reflects regulatory adaptation based on historical market behavior 1.

This change follows international trends, as BEI noted they considered “best practices at exchanges around the world” when implementing these new thresholds.

The 2008 financial crisis, when the Jakarta Stock Exchange experienced a catastrophic 21% drop over just three days, demonstrated the inadequacy of previous market protection mechanisms 1.

During that crisis, regulators were forced to suspend trading for multiple sessions, highlighting the need for more nuanced circuit breaker systems that could provide temporary cooling-off periods without completely shutting down price discovery.

BEI’s new graduated approach with 30-minute halts at different threshold levels (8% and 15%) before considering full suspension at 20% represents a more sophisticated approach to managing extreme volatility while maintaining market function.

B. Balancing market liquidity with investor protection remains a regulatory challenge

The adjusted auto-rejection limits to 15% for stocks across all boards represent BEI’s attempt to find equilibrium between market stability and trading flexibility.