Jakarta’s New Liquidity Play: IDX Taps Market Makers to End 'Price Stagnation'

JAKARTA, Investortrust.id — The Indonesia Stock Exchange (IDX) is officially deploying its secret weapon to fight market thinness. On Monday, the exchange launched its inaugural "Liquidity Provider" (LP) session, with Phintraco Sekuritas—a prominent local brokerage—acting as the first pioneer to provide continuous two-way quotes.

For years, the Jakarta market has struggled with a "liquidity gap," where many solid mid-cap stocks suffer from wide bid-ask spreads that deter institutional entry. By introducing official market makers, the IDX is attempting to manufacture the "depth" found in advanced markets like Singapore or Hong Kong. This initiative is a vital piece of the puzzle in lowering transaction costs and ensuring that large buy or sell orders don't trigger irrational price swings, ultimately making the Indonesian market a more attractive destination for global capital.

The First Movers

Phintraco Sekuritas kicked off the program on April 20 by providing liquidity for a diverse basket of five stocks: cigarette giant PT Gudang Garam Tbk (GGRM), paper producer PT Pabrik Kertas Tjiwi Kimia Tbk (TKIM), logistics firm PT Trans Power Marine Tbk (TPMA), insurer PT Asuransi Tugu Pratama Indonesia Tbk (TUGU), and shipping player PT Wintermar Offshore Marine Tbk (WINS).

Irvan Susandy, Director of Trading and Membership at the IDX, highlighted the structural necessity of this move during the launch at the Exchange building. "The active participation of exchange members as liquidity providers is a vital element in increasing liquidity and the quality of price discovery," Susandy said on Monday. He added that the goal is a direct win for the retail investor: "This will be achieved through the narrowing of bid-ask spreads and increasing market depth."

Sweetening the Deal for Brokers

To ensure the program doesn't stall, the IDX recently overhauled its policy framework. Revisions enacted on February 26 include more flexible incentive schemes and a broader list of eligible stocks. These changes were designed to offset the risks brokers take when holding inventory to provide quotes.

Mandiri Sekuritas, the brokerage arm of the state-owned banking titan Bank Mandiri, has already secured a license to join Phintraco in the program. Regulators are currently in talks with other major exchange members to expand the roster.

"The IDX appreciates the commitment of Phintraco Sekuritas in supporting this program," Susandy noted. "We hope this step can catalyze other members to participate, making our trading ecosystem increasingly liquid, credible, and competitive on a global scale."

Regional Competitive Edge

By formalizing the liquidity provider role, Indonesia is signaling that it is ready to move beyond its "emerging" roots. Improved price discovery—the process by which a market determines the "fair" price of an asset—is a prerequisite for the sophisticated trading strategies used by international hedge funds and pension managers.

The IDX plans to conduct continuous evaluations of the program, adjusting incentives based on market dynamics to ensure that "stagnant" stocks gain the visibility they need to trade more efficiently. For investors, this means a future where getting in and out of an Indonesian position no longer requires paying a "liquidity tax" in the form of wide spreads.