Indonesia Stock Exchange Partners with Nasdaq to Upgrade Market Infrastructure
Nasdaq (NDAQ) and the Indonesia Stock Exchange (IDX) have announced an expanded technology partnership to upgrade IDX's core trading platform to Nasdaq’s advanced matching engine. The partnership aims to enhance market resilience, quadruple transaction capacity, and support Indonesia's economic growth.
The deal also extends Nasdaq’s market surveillance partnership with IDX and aims to enhance IDX's Index business, fostering a more sophisticated global capital markets ecosystem. IDX has seen a significant growth in trading volumes and investor numbers in recent years, solidifying its position among ASEAN markets.
Nasdaq's scalable platform will support IDX’s ability to handle traditional and digital assets, offering flexibility for new product launches. The modernization aligns with strategic pillars set by OJK, Indonesia’s Financial Services Authority, to develop a robust capital market.
- Nasdaq's advanced matching engine will quadruple IDX's transaction capacity.
- The partnership extends Nasdaq’s market surveillance and enhances IDX’s Index business.
- IDX has experienced a 65% increase in trading volumes since 2019.
- The total number of investors on IDX has grown by over 400% to 12.6 million.
- Nasdaq's platform supports trading in equities, fixed income, foreign exchange, derivatives, and digital assets.
- IDX’s modernization supports strategic pillars set by OJK for a robust capital market.
- The new platform will enable low latency trading and flexible architecture for new indices.
- IDX has 921 companies listed, a 49% increase, leading among ASEAN markets.
- There is no explicit mention of immediate financial gains or revenue increases from the partnership.
- Potential high costs associated with upgrading to Nasdaq’s advanced technology.
Insights
From a financial perspective, the collaboration between the Indonesia Stock Exchange (IDX) and Nasdaq represents a significant strategic move for both parties. The upgrade to Nasdaq's advanced matching engine is likely to enhance the efficiency and capacity of IDX, potentially leading to more robust trading volumes and an increase in the number of listings.
For investors, this means a more attractive trading platform that can handle higher transaction volumes with lower latency. As the Indonesian market grows, the ability to manage increased trading activity without bottlenecks will be pivotal. Moreover, Nasdaq's market surveillance technology will help ensure a secure and transparent trading environment, which is highly appealing to institutional investors.
In the short term, the transition phase could involve some operational risks, such as system integration challenges or temporary disruptions. However, the long-term benefits, including enhanced platform scalability and improved market integrity, outweigh these risks.
A key metric to monitor would be the increase in trading volumes and the number of new listings on the IDX post-upgrade, which would provide tangible evidence of the partnership's success.
The strategic partnership between IDX and Nasdaq is a testament to Indonesia's ambitions to elevate its capital markets to global standards. The Indonesian stock market has seen impressive growth over the past few years and this technological upgrade will likely maintain its upward trajectory. The scalability of the new platform is a game-changer, quadrupling transaction capacity and enhancing the overall trading experience.
From a market research standpoint, the move also positions Indonesia as a more attractive destination for foreign investment. With the ability to offer a wider array of products and services, including traditional and digital assets, IDX is poised to attract diverse investor profiles. An important aspect to consider here is the flexibility to quickly design and launch new indices, which will be essential in keeping up with evolving market demands.
While the modernization is a positive step, potential drawbacks could include the initial implementation costs and the learning curve for market participants adapting to the new system. However, the long-term implications are overwhelmingly positive, fostering a more dynamic and resilient market infrastructure.
From a technological standpoint, the collaboration between IDX and Nasdaq is a significant upgrade. Nasdaq's matching engine is renowned for its high performance, capable of delivering low latency and high throughput, which are important for modern trading systems. The enhanced platform will not only increase the transaction capacity but also ensure a deterministic trading experience, meaning that transaction times will be reliable and predictable.
Additionally, the integration of Nasdaq’s market surveillance technology will bolster IDX's ability to monitor trading activities and detect irregularities in real-time. This is important for maintaining market integrity and investor confidence.
Flexibility in architecture is another highlight, allowing IDX to adapt and scale its operations efficiently. This is particularly important as the financial landscape continues to evolve, with digital assets gaining traction. The ability to support a wide range of asset classes positions IDX well for future growth.
Overall, the technological enhancements will likely make IDX a more robust and competitive exchange, capable of meeting the demands of both domestic and international investors.
Technology partnership will further enhance overall resilience and integrity of the exchange, while supporting the rapid deployment of new products and services
Scalable trading platform will quadruple transaction capacity and support development of Indonesian economy
NEW YORK and JAKARTA, Indonesia, June 17, 2024 (GLOBE NEWSWIRE) -- Nasdaq (Nasdaq: NDAQ) and the Indonesia Stock Exchange (IDX) today announced an expansion of their technology partnership which will see IDX upgrade its core trading platform to Nasdaq’s most advanced matching engine. The deal also includes an extension of Nasdaq’s market surveillance partnership with IDX, and an agreement to enhance IDX’s Index business to help foster a deeper and sophisticated global capital markets ecosystem.
The agreement builds on Nasdaq’s broad range of partnerships across the Indonesian financial system. In addition to Nasdaq’s long-standing relationship with IDX, Nasdaq provides market surveillance technology to OJK, Indonesia’s Financial Services Authority, the core technology platform that underpins KSEI, Indonesia’s central securities depository, and its Calypso treasury solution to Bank Indonesia, the country’s central bank. Collectively, greater interoperability across the fabric of the Indonesian financial system will reduce overall complexity and friction, ultimately helping to create a more efficient capital markets ecosystem.
The decision by IDX to modernize its underlying architecture is in line with the strategic pillars set out by OJK to develop a robust, stable, and sustainable capital market that can support the ongoing development of the Indonesian economy.
Sunandar, Director of Information Technology and Risk Management at IDX said: “With this trading system and technology infrastructure upgrade, we envisage becoming more competitive and staying attractive for both domestic and international investors. We believe this partnership will speed up the modernization advancement of the Indonesia capital market while supporting sustainable economic growth.”
IDX has experienced a period of rapid growth over recent years with trading volumes having increased
Nasdaq’s modular and scalable platform will support IDX’s continued ability to serve Indonesia’s capital market as its economy grows. The platform supports trading in traditional asset classes, including equities, fixed income, foreign exchange, and derivatives, as well as digital assets, providing the flexibility to support IDX’s objective of increasing the number of products and services it offers to clients. In addition, by bringing flexible architecture to the Index business IDX will be able to quickly design and launch new indices as growth opportunities arise. Ultimately, the new platform will quadruple transaction capacity whilst supporting a deterministic low latency trading experience.
Magnus Haglind, Head of Marketplace Technology at Nasdaq said: “Nasdaq is playing a critical role at the heart of Indonesia’s modernization story. We welcome the opportunity to support Indonesia Stock Exchange’s vision and ambition to become a world-class exchange. By supporting the development of a deep and sophisticated capital markets ecosystem in Indonesia, we can help deliver growth and prosperity across the country and wider region.”
Nasdaq’s Financial Technology division provides mission-critical capital markets and regulatory technology solutions to the financial services industry. As a scaled platform partner, Nasdaq draws on deep industry experience and technology expertise to help 3,500+ banks, brokers, regulators, financial infrastructure operators, and buy-side firms solve their toughest operational challenges while advancing industrywide modernization.
About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a leading global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions, and career opportunities, visit us on LinkedIn, on X @Nasdaq, or at www.nasdaq.com.
About Indonesia Stock Exchange
IDX is the only stock exchange in Indonesia with main function is to create a fair, orderly, and efficient capital market in Indonesia. IDX promotes sustainable capital market through various initiatives and works closely with all stakeholders to provide transparency and investor protection. As part of Self-Regulatory Organization (SRO) to provide robust capital market infrastructure in Indonesia, IDX is also supported by IDClear as Clearing and Guarantee Institution or Central Counterparty (CCP) and KSEI, Indonesia Central Securities Depository, as the Depository and Settlement Institution. To learn more about IDX, visit our website www.idx.co.id or official social media linktr.ee/indonesiastockexchange.
Media Contacts:
Andrew Hughes
+44 (0)7443 100896
Andrew.Hughes@nasdaq.com
Kautsar Primadi Nurahmad
contactcenter@idx.co.id
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