Regular Market, Negotiated Market, and Cash Market
The regular market is a type of market where investors carry out various
transactions according to which prices have increased based on price fractions.
Transactions carried out will utilize several types of bargaining consistently and
continuously according to the trading period. The mechanism used during the bargaining
process is carried out on an ongoing basis with stock exchange members. Usually, the
transaction process is completed on the third trading day after the transaction occurs. This
means that the stock price moves continuously and becomes a reference in calculating the
stock index on the Indonesia Stock Exchange. In the application of prices on the regular
market, usually the selling and buying price of shares has been determined directly by each
broker. Then the fixed price will be displayed by stockbrokers on the IDX electronic board
for more transparent and general viewing. Meanwhile, bids and offers on the regular
market move according to the current market situation. In order to avoid excessive price
speculation, the stock exchange will set prices based on the terms upper and lower limits.
The purpose of this determination is to keep each share price from turning too low and too
high so that trading stability will run smoothly and fairly.
The negotiated market makes individual bargains with members of the buying and
selling exchanges. This is the basis or reference for the negotiated market. In addition, the
guidelines used in these bargaining or trading conditions use the last exchange rate on the
regular market. However, the trading process does not refer to an ongoing basis so that the
settlement is carried out on the basis of an agreement between members of the stock
exchange. In a negotiated market, there are not so many rules. This is because the
negotiated market does not impose upper and lower limits or auto rejection on each share
price. This means that if an investor wants a transaction whose share price is beyond the
limit of auto rejection, they must first report to the IDX according to reasons and objectives
that can be clearly accepted.
The cash market has fairly the same conditions as the regular market. Transaction
settlement is carried out three days after the transaction on the regular market occurs. The
difference is only in the specified payment system. Because payments on the cash market
are made on the same day as the transaction. The presence of the cash market aims to
resolve any failures that occur to exchange members, whether in fulfilling obligations in the
regular market or even in the negotiated market. For example, in a short selling
transaction, this transaction can be completed using the principle of payment and instant
delivery.
Transactions that occur on the regular market use a bargaining mechanism during
the trading period so that stocks will change every time. Shares in the negotiated market
will be traded if the number of shares of an investor is not even 1 share lot or less than 100
shares. Meanwhile, the trading mechanism also uses bargaining, it's just that it is personal
with stock exchange supervision. The trading mechanism of stocks in the cash market is
not much different from the regular market. It's just that the payments made by the cash
market are quite fast and real time, namely on the same day when the transaction occurs.
Meanwhile, the main function mentioned earlier is the cash market to resolve any failure of
stock exchange members to fulfil their obligations in the regular market and the cash
market.
