What is IHSG Trading Halt? Read the explanation here!

Bittime - In the world of the stock market, high volatility can trigger excessive panic. One of the instruments used to overcome this is trading halt. Trading halt is a temporary suspension of trading carried out by the Indonesian Stock Exchange (BEI) when there is a sharp decline in the Composite Stock Price Index (IHSG). This step aims to give investors time not to act rashly and prevent panic selling.

Causes of Trading Halts

Trading halt generally occurs when the JCI experiences a fairly large decline in a short period of time. According to applicable regulations, if the JCI falls by more than 5 percent in one trading day, the IDX will stop trading for 30 minutes. If the decline continues to more than 10 percent, then the trading halt is extended for an additional 30 minutes. And if the decline exceeds 15 percent, trading can be stopped until the end of the session, or even longer based on the decision of the Financial Services Authority (OJK).

Purpose of Implementing Trading Halt

According to research by Santy Aji Sitohang and colleagues (2021), trading halts are implemented to protect investors from panic selling decisions, which can cause large losses in a short time. With this time lag, investors can re-examine their fundamental and technical stock data, calm themselves, and make more rational decisions.

Read also: Bitcoin Vs Gold Investment in 2025: Which Makes More Money?

Trading Halt Rules in Indonesia

Trading halt regulations have been clearly regulated in the Order of the Head of the OJK Capital Market Supervision Department 2A dated March 10 2020. This regulation does not only apply to conditions of sharp decline, but also as a form of control so that the market is not further pressured by excessive emotional reactions from market players.

Conclusion

A trading halt is not a sign that the market is in trouble, but rather a protective mechanism to stabilize conditions when major turmoil occurs. This step helps maintain investor confidence and prevents unnecessary panic.

FAQ

1. What is meant by trading halt?

Trading halt is a temporary suspension of trading on an exchange to reduce panic when a sharp decline occurs.

2. When will the trading halt be implemented on the IDX?

Trading halt is enforced if the JCI falls by more than 5 percent in one trading day.

3. How long is the trading halt duration?
The trading halt duration is usually 30 minutes and can be extended if the JCI declines deeper.

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