Indonesia Stock Exchange CEO Resigns Amid Market Transparency Crisis
Indonesia's financial sector faces its biggest leadership shake-up since 1998 as exchange CEO and OJK chairman resign over transparency crisis. Market loses $80B as foreign investors flee.
Indonesia Stock Exchange president director Iman Rachman resigned on January 30, 2026, hours before Financial Services Authority (OJK) chairman Mahendra Siregar and several senior commissioners also stepped down, marking the most significant leadership shake-up in Indonesia's financial sector since 1998.
The resignations followed MSCI's warning about transparency deficiencies in Indonesian stocks, which triggered the Jakarta Composite Index's worst two-day plunge since the 1998 Asian financial crisis. The index dropped eight to 10%, erasing more than $80 billion in market value.
Foreign investors withdrew $739 million through late January, with banks including HSBC, Goldman Sachs, and UBS downgrading Indonesian equities. In extreme scenarios, analysts projected potential outflows reaching $13 billion.
Pump-and-Dump Schemes Cost Retail Investors Billions
Critics call the crisis a result of regulatory negligence, with retail investors losing billions of dollars over the past decade to stock manipulation schemes known locally as "goreng saham."
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Jakarta advertising employee Bambang, 39, lost more than half his investment in Bank MNC shares five years ago after falling victim to a pump-and-dump scheme. Manipulators systematically spread rumors across trading forums that Chinese tech giant ByteDance would back the bank, fueling aggressive buying. When ByteDance failed to participate in the anticipated rights issue, the stock collapsed.
Despite widespread suspicion of manipulation, OJK conducted no official investigation. Retail investors Rivki Maulana and Muhammad Avisena suffered similar losses exceeding 100 million rupiah (~US$7,500) each in schemes targeting Multi Makmur Lemindo, which surged 130% within one month, and Diamond Citra Propertindo, which skyrocketed 2,900% in mid-2025.
"We give serious attention to efforts to strengthen capital market surveillance and integrity," OJK commissioner Hasan Fawzi acknowledged on February 4, 2026.
Structural Conflicts Enable Market Manipulation
A fundamental conflict of interest exists at the heart of Indonesia's market structure. The Indonesia Stock Exchange is owned by the stock brokerages it regulates, creating hesitation to punish violations. Many manipulation cases have involved complicit brokerages.
The 7.5% free-float threshold, far too low to prevent manipulation, enabled schemes where individuals or groups accumulated massive stock portions to dictate prices. Indonesia's 1995 Capital Market Law grants OJK independent investigative power over stock market crimes, yet the regulator faced repeated criticism for appearing to ignore manipulation cases.
OJK possesses a "disgorgement" instrument allowing it to order manipulators to return illegal gains to victim compensation funds. This tool remains underutilized despite widespread manipulation.
Government Pledges Structural Reforms
Indonesia's government announced reforms including doubling the minimum free-float requirement to 15% from the previous 7.5% threshold, effective next month. Additional measures include adopting artificial intelligence for market surveillance, implementing stricter trading supervision, and demutualizing the exchange to eliminate ownership conflicts.
"Companies can achieve higher thresholds through rights issues or private placements, substantially complicating price manipulation efforts," said Erwin Kurnia Winenda, capital market legal counsel.
Finance Minister Purbaya Yudhi Sadewa called the resignations "positive signals to restore investor confidence." Danantara Indonesia CEO Rosan Roeslani reported foreign investors signaled willingness to return if structural reforms proceed, but confidence remains fragile pending execution of transparency commitments.
The crisis exposed broader governance failures across Asian markets. Hong Kong's Securities and Futures Commission issued a January 30 circular citing "serious deficiencies" in IPO listing documents and inadequate regulatory responses, targeting 13 sponsors for mandatory internal reviews within three months.
IDX appointed Jeffrey Hendrik as acting president director, tasking him with engaging MSCI and articulating reform commitments around transparency and governance.
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