Demutualization of Indonesia Stock Exchange as a Strategic Measure and a Means to Improve Efficient Trading

Abstract

The purpose of establishment of Indonesia Stock Exchange is to run the securities trading which orderly, fair and efficient. The demand for the implementation of good corporate governance is one of the issues to attract the interest of potential investor on capital market in a state. Driven from article 8 of law number 8 of 1995 that the member of Indonesia Stock Exchange is also the shareholder of the stock exchange. By that, many possibilities of problems may occur such as crime in the form of fraud, manipulation of market, and insider trading. The problem statements are: Has the structure of Indonesia Stock Exchange nowadays implemented the Good Corporate Governance principles in order to create orderly, fair and efficient trading exchange?; Why is demutualization necessary by Indonesia Stock Exchange to create orderly, fair and efficient trading exchange?. Method of research which is used is comparative normative approach. Method of collecting the sources is by literature research, it is examining the books, literatures, and related materials which supporting the problem of this research. The result of this research shows that the implementation of good corporate governance principle is not well implemented yet due to the conflict of interest between existing structure owners and the legal status of Indonesia Stock Exchange is not in accordance with the Law Number 40 of 2007 about Indonesia Limited Liability Company Law. And demutualization is considered as a solution to increase the quality of corporate governance, for instance, in the issue of conflict of interest by separating the ownership from the membership and trading rights so that it can lead into proper running of the stock exchanges which is orderly, fair and efficient trading. This research recommends the amendment of article 8 of Law Number 8 of 1995, and conducting the demutualization in the form of establishing a holding company.