This is a guest post by Charmaine Athaide, Managing Director for Asia Pacific at Devexperts.
Boasting a population of almost 300 million, Indonesia is rapidly becoming a trading powerhouse viewed by international brokers as a gateway to Asia. The fourth most populous country in the world hosts approximately 19 million retail traders, more than half of which are under the age of 30.
Brokers in Indonesia are being incentivized to open up to global markets, with the government said to be in talks to introduce measures to encourage the country’s brokers to offer US securities, including a series of tax breaks that make this diversification appealing.
The recent entry of brokers like XTB, Plus500, and Robinhood’s imminent expansion into the country signals a wider recognition of Indonesia as a regional trading hub that’s in the process of opening up to investment from international financial services firms.
In the following article we explore the history of trading in Indonesia and highlight some of the regulatory idiosyncrasies that brokers seeking to enter this exciting market ought to be aware of.
A brief history of Indonesian capital markets
The first stock exchange in Indonesia was established in Jakarta in 1912 during the colonial era by the Dutch East India Company. During the First World War trading ceased and was allowed to recommence in 1925 when the Jakarta, Semarang, and Surabaya exchanges reopened. These reopenings proved to be short-lived as Semarang and Surabaya exchanges closed again in 1939 at the start of WWII, followed by Jakarta in 1942.
Dutch companies were nationalized following the establishment of the Republic of Indonesia in 1945, and the official transfer of power from the Netherlands in 1949. However, Indonesian stock exchanges lapsed into inactivity following independence.
In 1977, the Jakarta Stock Exchange was reopened and began to be overseen by the newly created Capital Markets Implementing Agency (BAPEPAM). Despite this, activity remained muted, with only 24 issuers by 1987. In 1988, the Indonesian Parallel Exchange (BPI) opened its doors under management of the Money and Securities Trade Association (PPUE), and the Surabaya Stock Exchange (BES) started trading in 1989 under the management of a privately owned LLC.
In 1992, the Jakarta Stock Exchange was privatized. Henceforth, 1992 would be considered the exchange’s establishment date. Also in 1992, BAPEPAM changed its title to the Capital Market Supervisory Agency. 1995 saw the introduction of automated trading on the Jakarta Stock exchange via JATS (Jakarta Automated Trading Systems).
In 1996 and 1997 two of the country’s key self-regulatory bodies (SROs) were established, first the Indonesia Clearing and Guarantee Corporation (KPEI), followed by the Indonesia Central Securities Depository (KSEI).
In 2000, “scripless,” or electronic trading of stocks, was introduced on the Jakarta stock exchange, followed by the completion of a transition from T+4 to T+3 settlement in 2002.
In 2007, the Surabaya Stock Exchange (BES) and Jakarta Stock Exchange (JSX) merged to form the Indonesia Stock Exchange (IDX). In 2009, the newly formed exchange replaced the existing JATS system with a new trading system called JATS-NextG.
In 2012, the Indonesia Financial Services Authority (OJK) was established, along with the Indonesia Securities Investor Protection Fund (SIPF), and in 2018, the Indonesia Stock Exchange completed its transition from T+3 to T+2 settlement.
Indonesian regulatory bodies
Financial Services Authority
Indonesia’s Financial Services Authority (OKJ) replaced the Capital Markets Supervisory Agency (BAPEPAM) as the country’s primary regulator in 2013. Today, it’s the country’s main financial regulator, overseeing all financial services including capital markets, banking, insurance, peer-to-peer lending, and digital assets since it took this responsibility over from the Commodity Futures Trading Regulatory Authority (BAPPEBTI) in 2025. The body is responsible for issuing licenses to firms, enforcing regulatory compliance, and ensuring investor protection.
Commodity Futures Trading Regulatory Agency
The Commodity Futures Trading Regulatory Agency (BAPPEBTI) is the country’s futures regulator, with commodity futures, some CFDs, and other derivatives under its oversight. Until 2025, it was also responsible for digital assets. However, these regulatory responsibilities were transferred to OKJ, following P2SK Law changes in 2023, with the full transition expected to be complete by 2027.
Bank Indonesia
Bank Indonesia is the central bank of Indonesia, which superseded the colonial Bank of Java in 1953 following its post-independence nationalization in 1951. The bank is responsible for setting Indonesian monetary policy, overseeing payment systems, and is now also responsible for overseeing money market instruments and forex derivatives (including FX CFDs,) following the P2SK Law changes.
Indonesia Central Securities Depository
The Indonesia Central Securities Depository (KSEI) is a self-regulatory organization (SRO). Licensed and supervised by OKJ, it is a securities depository responsible for providing custody and settlement services for securities listed on the Indonesian Stock Exchange.
Indonesia Clearing and Guarantee Corporation
The Indonesia Clearing and Guarantee Corporation (KPEI) is a separate OKJ-licensed SRO responsible for guaranteeing, netting, and clearing IDX trades.
Some unique features of Indonesian regulation
Many retail brokers seeking to enter the Indonesian market have experienced difficulties owing to the unique way different assets and instruments are regulated in the country. For one, the republic’s treatment of OTC instruments like CFDs is characterized by regulatory fragmentation and restrictions when compared to other regulators in the region.
One of the main idiosyncrasies of the Indonesian market is that OTC transactions are centrally cleared, compared to other jurisdictions where OTC trading is, by its very nature, decentralized.
Brokers wishing to enter the market must be aware that futures exchange membership is required for all OTC brokers to operate legally in the country. OTC brokers essentially function as clearing intermediaries rather than as market makers, with settlement of OTC contracts guaranteed by the exchanges in question.
This ensures that client funds are segregated by regulated clearing houses, margins are standardized, counterparties are verified, and regular audits are performed in the interests of reducing default and fraud risks.
This structure also restricts B-book practices, where brokers act as market makers and trade against their clients without hedging externally. By requiring brokers to attain exchange membership and centrally clear their trades, price manipulation is prevented, margins are standardized, and disreputable practices such as stop-hunting and selective slippage are curtailed.
The unique structure of Indonesian OTC trading also means that all types of retail brokers must obtain multiple permissions if they offer multi-asset trading. For example, brokers offering digital assets and stocks/indices require both a Digital Financial Asset (DFA) Trading Platform License, and a Derivative Securities Trading Intermediary License from OKJ. Brokers offering commodity derivatives like crude oil and gold must attain a Futures Broker Business License and Approval as Participant of Alternative Trading System from BAPPEBTI, with those seeking to also offer access to offshore financial instruments also required to gain a PALN license. Meanwhile, brokers offering foreign exchange trading must now also register with Bank Indonesia.
International brokers acquiring local firms
Despite these complications, international brokers are viewing Indonesia as a highly attractive market with a great deal of future potential. It appears that a strategy being employed to cut down time to market is to acquire Indonesian financial services firms with pre-existing licenses.
This has been XTB’s strategy, the Polish broker recently bought a majority stake in Indonesian futures broker, Eagle Capital Futures. Plus500 has also acquired local broker, Global Intra Berjangka, and it was recently announced that Robinhood has agreed to purchase both the Buana Capital Sekuritas brokerage, and crypto firm Pedagang Aset Kripto.
Devexperts is also witnessing signs of this growing interest, with a marked increase in enquiries from the Indonesian market into its flagship multi-asset trading platform, DXtrade, as well as the market data services of its sister company dxFeed.
Final thoughts
Things are heating up in Indonesian retail brokerage, with the combination of a large population, youthful demographics, and well-developed capital markets making Indonesia a jurisdiction that’s hard to resist, despite the complicated regulatory environment.
