The chief executive of the Indonesian Stock Exchange has resigned following a sharp market sell-off that wiped out an estimated $84 billion in value over two days, triggered by concerns over a possible downgrade by global index provider MSCI Inc..
The Indonesia Stock Exchange said on Friday that Iman Rachman stepped down to take responsibility for what it described as the “recent market condition.” No further details were provided.
Speaking at a press conference, Rachman said he hoped his resignation would help stabilise the capital market and restore confidence. “I hope this is the best decision for the capital market,” he said, adding that he expected market conditions to improve in the coming days.
The sell-off followed an announcement by MSCI earlier this week warning that Indonesia could face a downgrade from emerging market to frontier market status. MSCI cited concerns over trading transparency, including opaque shareholding structures and the potential for coordinated trading that could distort price formation.
Indonesia’s benchmark Jakarta Composite Index fell 7.35% on Wednesday and a further 1.06% on Thursday, before rebounding 1.18% on Friday.
Ahead of his resignation, Rachman said Indonesian regulators had been engaging with MSCI to address transparency issues, particularly around free-float levels and ownership disclosures. On Thursday, Indonesia’s financial regulator announced plans to raise the minimum free-float requirement for listed companies to 15%, doubling the current threshold.
The stock exchange acknowledged MSCI’s feedback, describing it as an important part of ongoing efforts to strengthen market credibility and improve Indonesia’s standing in global indices.
Market participants said the episode highlighted long-standing concerns about liquidity and transparency. Indonesia’s stock market currently averages around $1 billion in daily trading liquidity, significantly below levels seen in larger emerging markets.
