The Indonesia Stock Exchange Imposing Sanctions on Two Securities

The Indonesia Stock Exchange or IDX imposed sanctions on the two securities for conducting short selling transactions without the approval of the stock exchange authority. The two securities are PT Reliance Sekuritas Indonesia Tbk. (RELI) and PT Valbury Sekuritas Indonesia.

IDX directors Risa Rustam and Laksono Widodo stated that the stock exchange authority gave written warnings to the two companies.

“Based on the results of the Exchange‘s inspection, it is known that Reliance Sekuritas has made a short selling transaction without having the Exchange’s approval to conduct a short selling transaction,” wrote Risa and Laksono in an Exchange announcement, Friday, December 24, 2021.

As with Reliance Sekuritas, the IDX gave a written warning to Valbury Sekuritas for conducting short selling transactions.

Short selling is an empty buy transaction. In this case, investors borrow funds to sell shares they don’t own when prices are high, with the expectation that the shorted stock will surely correct.

The IDX began to prohibit short selling transactions on March 2, 2020. This transaction ban was imposed due to the collapse of the worldwide stock market due to Covid-19.

The ban on short selling transactions was later extended amid volatile market conditions in early 2021. Whereas previously the IDX had intended to open the ban in line with market conditions starting to recover.

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