Manurung, Jadi Haposan (2016) Investor Protection in the Indonesian Securities Market: Fact or Fiction? PhD thesis, Victoria University.

Abstract

The improvement of investor protection systems is increasingly becoming a major concern of the financial sector in almost all jurisdictions because investors play a significant role in sustaining the activities of the securities market. With the enactment of its Capital Market Law, Indonesia has developed a rule and principles-based system to protect investors. However, the purpose of an investor protection system is not merely to provide regulations, ensure market supervision, and law enforcement, but also to provide investors with mechanisms for effective and efficient financial dispute resolution. Moreover, most research on investor protection systems has focused on the issue of compliance with disclosure requirements by public listed companies and issuers. In addition, previous studies of investor protection systems have been concerned with the governance of market institutions and licensed entities when implementing rules and regulations in the securities market. Neither scholars nor practitioners have paid much attention to seeking the means by which disputes between retail investors and license entities can be responded to and resolved quickly and effectively. This study aims to investigate whether the existing Indonesian domestic laws and regulations effectively meet the requirements of securities investments in Indonesia. Another objective of this research is to scrutinise the regulatory framework of the Indonesian financial sectors. The study assessed the feasibility of introducing law reforms in the Indonesian securities market and establishing financial dispute resolution mechanisms in the financial sectors, including the securities market, according to the Financial Services Law. For the purposes of this study, we conducted an extensive review of the literature, the publicly available reports, and the documents pertaining to the investor protection system. We also examined the domestic and international norms, regulations and legislations related to investor protection mechanisms in the financial services sectors. This study has drawn on the empirical experiences and best practices of other jurisdictions in implementing protective measures for retail investors. This research involves several forms of investigations and methods, namely regulatory reviews, informal group discussions, and lessons-learned. The thesis found that the implementation of a financial dispute resolution mechanism in the Indonesia financial services sectors, including the securities market is essential given the failure of the judiciary system in Indonesia in providing legal certainty and better enforcements, especially for retail investors. Further, the regulator needs to establish a close relationship with other enforcement institutions in order to make better decisions in legal proceedings to benefit investors. To address the current shortfall in regulations relevant to the securities market and investor protection system, the study finds that Indonesia needs supports from international paradigms and best practices in order to develop an effective investor protection system.

Search Google Scholar

Repository staff login