Understanding Derivatives and the Launch of Single Stock Futures (SSF) on the Indonesia Stock Exchange

Investing in the capital market has become a part of life for some people, especially in forms like stocks, bonds, government bonds, or mutual funds. However, for more skilled and experienced investors, there are other, more complex investment products known as derivatives. A derivative is an agreement or contract between two parties to buy or sell a certain asset in the future at a predetermined price. As such, derivatives are often referred to as "derivative securities" because their profitability depends on the performance of the assets in the spot market.

Derivatives in the capital market serve several important functions. Besides being a means for leveraged transactions—allowing investors to gain higher profits with smaller capital—derivatives are also used for arbitrage, which involves taking advantage of price differences in various markets. Another function is for hedging, where derivatives are used to protect portfolios from unwanted market fluctuations.

On the Indonesia Stock Exchange (IDX), available derivative products are financial derivatives, which are based on financial instruments such as stocks, bonds, stock indices, and bond indices. Derivative products traded on the IDX include IDX LQ45 Futures, Indonesia Government Bond Futures, IDX30 Futures, and Basket Bond Futures. Soon, the IDX will launch a new derivative product called Single Stock Futures (SSF).

SSF is a unique product because it differs from other financial derivatives on the IDX. While other derivative products are based on stock indices and government bonds, SSF is based on individual stocks. One of the advantages of SSF is its lower contract size compared to other derivative products, allowing investors to start investing with smaller capital. For example, if an investor wants to buy a stock underlying an SSF at Rp10,000 per share, they only need to pay Rp40,000 for one contract equivalent to 100 shares. This is much cheaper than buying the shares directly, which would require a capital of Rp1,000,000.

Another advantage of SSF is its flexibility in making profits. Investors can gain profits whether the market is rising or falling. For instance, if the market is experiencing a downward trend, investors can take a short position, expecting the underlying stock price of the SSF to decline, allowing them to profit from the price drop.

In the initial phase of the launch, the IDX will introduce SSF using five stocks from the LQ45 index as underlying assets, namely BBCA, BBRI, TLKM, ASII, and MDKA. Each of these stocks will have contract periods of 1 month, 2 months, and 3 months, resulting in a total of 15 SSF series being launched. To support the ease of SSF transactions, the IDX, in collaboration with PT Kliring Penjaminan Efek Indonesia (KPEI) and PT Kustodian Sentral Efek Indonesia (KSEI), has developed the necessary regulatory infrastructure and systems.

Currently, the IDX, along with its derivative members, is preparing everything needed to offer SSF to the public. The IDX is also actively conducting socialization and education on non-stock products, including derivatives, to ensure investors have a better understanding and can fully utilize these products. With this strategy, the IDX demonstrates its commitment to being adaptive and innovative in developing a variety of investment products. This is done to provide more options for investors in the Indonesian capital market, enabling them to achieve optimal returns in an ever-evolving market environment.