The Jakarta Stock Exchange (JSX) and the Surabaya Stock Exchange (SSX) merged on 1 December 2007 to form the Indonesia Stock Exchange (IDX). The merger aimed to improve market efficiency, liquidity, and overall competitiveness.
Prior to the merger, the SSX was the only exchange in Indonesia to trade bonds (corporate, government, and retail). Retail bonds were launched on the SSX in August 2006, while the trading of government bonds—at a minimum of IDR5 million—was permitted beginning in May 2007.
The IDX maintains the SSX system for bond transactions:
- the Fixed-Income Trading System (FITS) is a scripless trading system for listed bonds, including retail bonds. FITS uses the automated securities trading system platform, which allows remote trading between market participants; and
- the Centralized Trading Platform, which was inaugurated in September 2006, ensures that all bond transactions are reported a maximum of one hour after the transaction has been made. This allows for increased bond price transparency.
The FITS of IDX provides members with access to its two trading boards:
- the Regular Outright Board is a bond trading mechanism that establishes a continuous auction between buyers and sellers based on market price and time; and
- the Negotiated Board is a trading facility that allows IDX members to disclose the results of negotiated trade transactions with another party.
The Ministry of Finance (MOF) has the authority to issue government debt securities, including treasury bonds and treasury bills. Bank Indonesia (BI) manages the issuance of Sertifikat Bank Indonesia (SBI) notes, which are short-term bank certificates.
The Inter-Dealer Market Association for Government Securities (HIMDASUN) was created in March 2003 to increase the liquidity of the secondary bond market by facilitating price information.
The secondary market for corporate bonds is underdeveloped in Indonesia because bondholders usually hold their bonds until maturity. The trading of corporate bonds is facilitated through IDX’s FITS.