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Understanding Stock Suspended

monarchcb.com - "XXXX shares are suspended." Such information is often heard and worries investors who own the shares. Exactly what is a stock interrupt? What are the terms of stock interruption? Why can a stock be suspended? How long can a stock be suspended? Next is a complete description of stock interruptions.

What is a Stock Interrupt?

Stock interruption is a temporary cessation of stock trading activities. So as long as the stock interruption is enforced, the stock is completely non-tradeable in the money market. Stock interruptions can be applied to one market (regular, cash, or negotiation) or all of them. Stock interruptions are also a form of reward from the IDX to issuers who have committed special violations. Interrupts defined here are interruptions to individual stocks, in contrast to stock money market interruptions which are legal for the total number of shares in the money market.

What is the Purpose of Stock Interrupts?

The purpose of a suspended stock is as an effort of the Indonesian Impact Money Market (BEI) to ensure that the capital market is always orderly, natural and efficient. Based on the IDX regulations, interruptions are one of the most severe rewards, namely at level 4. Only one level before the heaviest reward is that the issuer is removed from the money market (delisted). Next is a queue of sanctions that can be imposed by the IDX, ranging from the lightest to the heaviest:

  1. Maximum compensation of IDR 500 million.
  2. Recorded warning.
  3. Recorded warning.
  4. Temporary taboo to carry out trading activities in the money market (interrupts).
  5. Cancellation of money market expertise.

Why Stocks Can Get Interrupted?

On this basis are various violations that can result in the issuance of rewards by the IDX, including stock interruptions:

  1. Unusual Market Activy (UMA), is the movement of stock prices that move out of the ordinary. Stock interruptions usually occur a lot because of this.
  2. Mistakes in recording financial information.
  3. There is a comparison between notification of corporate action with actual events.
  4. Failed to pay off the loan or loan letter.
  5. Insider trading (fry stocks).
  6. Misuse of IPO proceeds or rights issue

How long is the duration of a stock that can be suspended?

Cannot be set. The length of the interruption duration is the full sovereignty of the IDX. If the offense is light, the interruption may range from a few days to several weeks. However, if the violation is serious, it may take quite a long time, from months to years.

What Can Investors Try If Their Shares Are Suspended?

There is nothing that investors can try but just stay and wait for the interruption to open in order to be able to do business again.

What Are the Consequences If A Stock Is Suspended?

As a result, investors will certainly not be able to buy or sell the shares during the interruption era. The case is that if the violation attempted by the issuer is quite serious, and the interruption lasts for up to 2 years, there is a risk of being delisted. That is, issuers are at risk of being excluded from the money market. Of course, the IDX will consider other aspects for delisting, for example, there are situations that significantly adversely affect business continuity, whether financial or legal, or the industry cannot show signs of healing.