Regulatory AlertsOJK Regulation No. 18 of 2024 on Liquidity Providers
The Financial Services Authority (OJK) issued Regulation No. 18 of 2024 to establish a legal framework for Liquidity Providers to enhance capital market liquidity and price stability through continuous quoting. This regulation grants exemptions from prohibitions on fictitious transactions and market manipulation for specific liquidity maintenance activities, aligning with the Capital Market Law as amended by the Financial Sector Development and Strengthening Act. It also sets forth requirements, prohibitions, and oversight mechanisms for Liquidity Providers while repealing conflicting provisions in previous derivative and warrant regulations.
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Sector: Capital Market
Sub-Sector: Other Regulations
Type of Regulation: OJK Regulation
Regulation Number: 18 of 2024
Effective Date: 11/8/2024
Appendix 1 POJK 18 of 2024 on Liquidity Provider.pdf Abstract of POJK 18 of 2024 on Liquidity Provider.pdf FAQ of POJK 18 of 2024 on Liquidity Provider.pdf
Page Content Regulation of the Financial Services Authority of the Republic of Indonesia Number 18 of 2024 concerning Liquidity Providers.
Abstract: The formulation of this Financial Services Authority Regulation (POJK) is an effort to deepen the market by encouraging an increase in the liquidity of Securities transactions in the Capital Market through Liquidity Provider activities, hereinafter referred to as Liquidity Provider.
This POJK serves as the legal basis for parties acting as Liquidity Providers to conduct continuous quotations or offers to sell and buy requests for specific Securities, thereby increasing the trading volume of such Securities and encouraging orderly price formation.
Furthermore, based on Article 94 of Law Number 8 of 1995 concerning the Capital Market (Capital Market Law), as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (Financial Sector Development and Strengthening Law), the OJK may determine certain actions that are exempted from fictitious transactions and market manipulation as regulated in Article 91 and Article 92 of the Capital Market Law, as amended by the Financial Sector Development and Strengthening Law.
Such specific actions include the continuous sale and purchase of Securities to maintain the liquidity of Securities trading at the market organizer. This POJK also serves as the legal basis for regulating the exemption of quotation activities conducted by Liquidity Providers from fictitious transactions and market manipulation as referred to in Article 94 of the Capital Market Law, as amended by the Financial Sector Development and Strengthening Law.
The legal basis for this POJK is: Law No. 8 of 1995, as amended by Law No. 4 of 2023; and Law No. 4 of 2023.
This Financial Services Authority Regulation regulates, among other things, the requirements and prohibitions for Liquidity Providers, Short Selling transactions by Liquidity Providers, and the regulation and supervision of Liquidity Providers by market organizers.
Note: This POJK takes effect 6 (six) months from the date of promulgation, with the date of promulgation of this POJK being 8 November 2024.
Upon the entry into force of this POJK: a) provisions regulating Liquidity Providers as referred to in Article 10 letter h and Article 12 paragraph (2) of Financial Services Authority Regulation Number 32/POJK.04/2020 concerning Equity Derivative Contracts; and b) provisions regulating Liquidity Providers as referred to in Article 36 paragraph (2) and Article 39 letter e of Financial Services Authority Regulation Number 8/POJK.04/2021 concerning Structured Warrants, are repealed and declared invalid.
Explanation: 4 pages.