MSCI clock ticking on Indonesia’s broken and untrusted IDX

For decades, Indonesia Stock Exchange’s (IDX) institutional structure has acted as a brake on the growth and global competitiveness of Indonesia’s capital market. The exchange still operates under a mutual ownership model, in which brokerage firms that use it are also its owners. While such arrangements were once common around the world, they have increasingly become an anachronism in modern financial markets. When the same entities that trade on the exchange also control its strategic direction, conflicts of interest become unavoidable. The exchange is expected to function as a Self-Regulatory Organization (SRO), enforcing market discipline impartially. Yet under a membership-based structure, those subject to regulation effectively influence the regulator itself.

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Excerpt limited to ~120 words for fair-use compliance. The full article is at Asia Times.