Indonesia Limits IPO Bids to 10% Cap to Stabilize Stock Market

Indonesia has introduced a new regulatory measure to limit the number of shares that investors can order during initial public offerings (IPOs). The Financial Services Authority (OJK) announced that an investor can purchase a maximum of 10% of an IPO's total value of shares. The policy took effect on November 17, 2025.

The change aims to reduce price volatility in the secondary market, especially for smaller IPOs. Regulators highlighted concerns that large orders could destabilize share prices if investors later sold their positions en masse.

The move is part of a broader effort to stabilize Indonesia's stock market and attract more liquidity. OJK has also proposed gradually increasing the minimum free float level for listed companies to improve market depth and investor confidence.

Market Stability and Regulatory Goals

The Jakarta Stock Exchange has seen 24 IPOs this year, raising about $930 million, according to Bloomberg.

The regulator's new policy is a response to growing concerns over volatility, particularly in smaller issues where price swings have been more pronounced. OJK stated that large orders can distort price discovery and increase risks in the secondary market.

Small IPOs have historically been more prone to price fluctuations due to lower trading volumes and fewer participants. By capping the size of individual orders, the OJK hopes to mitigate speculative behavior and prevent sudden price swings after shares begin trading publicly.

This is the latest in a series of regulatory measures aimed at improving market integrity. Earlier this year, the OJK introduced reforms to boost transparency and market efficiency. The 10% cap reflects a more cautious approach to managing IPO demand.

Broader Regulatory Strategy

The OJK has not set a timeline for its proposed minimum free float increase but has emphasized its commitment to long-term market development. A higher free float would mean more shares are available for public trading, reducing the risk of price manipulation and improving liquidity.

The regulator also aims to attract more local and international investors by fostering a more stable and predictable market environment. By addressing volatility concerns, the OJK is signaling its intent to make the Jakarta exchange more appealing for long-term investment.

Market participants have generally welcomed the new policy as a step in the right direction. Analysts note that while the rule may slightly limit demand for large IPOs, it is unlikely to deter overall market participation.

Implications for IPO Activity

The IPO market in Indonesia remains active, with companies continuing to seek public funding despite the regulatory changes. The OJK's focus on stability is expected to support confidence among retail and institutional investors, who have been wary of price swings in recent listings.

Regulators are also monitoring the impact of the policy on IPO subscription rates and secondary market performance. If the policy proves effective, it could serve as a model for other emerging markets grappling with similar volatility issues.

Meanwhile, the broader Southeast Asian market is also seeing increased IPO activity, with several countries implementing reforms to enhance market depth and investor protection. Indonesia's regulatory steps align with this regional trend toward greater market discipline.