OJK Introduces New Rules For Liquidity Providers In Securities Trading

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OJK Introduces New Rules For Liquidity Providers In Securities Trading

Friday, 28 Feb 2025

The Financial Services Authority (OJK) has issued Regulation OJK Number 18 of 2024 regarding liquidity providers. This aims to deepen the financial market and enhance the liquidity of traded securities through market organizers. Acting Head of the Department of Literacy, Financial Inclusion, and Communication at OJK, M. Ismail Riyadi, stated that this regulation serves as a legal basis for liquidity providers to engage in continuous buying and selling of securities by brokerage firms or other parties. "This is to maintain the liquidity of securities trading in the market," he mentioned in an official statement on Tuesday, December 17, 2024. He added that the regulation outlines the role of liquidity providers, who must be approved by the market organizers to trade securities. Additionally, these providers are required to quote specific securities designated by the market organizers to support trading liquidity. "The regulation specifies that those who can act as liquidity providers include brokerage intermediaries and other parties approved by OJK," he noted. Ismail explained that the regulation covers requirements and prohibitions for liquidity providers, short selling transactions by them, and the oversight of liquidity providers by market organizers. It is important to note that this regulation will take effect six months after its promulgation on November 8, 2024.

When this regulation comes into effect, the rules regarding liquidity providers mentioned in Article 10 letter h and Article 12 paragraph (2) of the Financial Services Authority Regulation Number 32/POJK.04/2020 on Derivative Securities, as well as the rules concerning liquidity providers in Article 36 paragraph (2) and Article 39 letter e of the Financial Services Authority Regulation Number 8/POJK.04/2021 on Structured Warrants will be revoked and declared invalid.

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