When investing in the stock market, you may come across stocks with special notations that are traded using a different mechanism from regular stocks. This often raises questions, especially among new investors. It is important to understand that not all stocks are traded through the standard continuous trading system. Under certain conditions, the Indonesia Stock Exchange (IDX) applies the Full Call Auction (FCA) mechanism to stocks with specific characteristics. So, what exactly is FCA in the stock market? Here's what you need to know.

What Is FCA in the Stock Market?

FCA, or Full Call Auction, is a stock trading mechanism that differs from the regular continuous trading system. In continuous trading, transactions occur continuously throughout market hours whenever buy and sell orders match. Under the FCA mechanism, however, all buy and sell orders are collected first and then matched simultaneously at predetermined times.

Key characteristics of FCA include:

• Buy and sell orders are accumulated before execution.
• Trades are not executed immediately after an order is placed.
• Orders are matched at scheduled auction times.
• All eligible orders are executed simultaneously at the equilibrium price.

Why Does the Stock Exchange Implement FCA? 

The Full Call Auction mechanism is designed to support orderly and transparent trading for stocks with specific trading characteristics. Through FCA, the Indonesia Stock Exchange aims to facilitate a more efficient price discovery process while reducing excessive market volatility.

The main objectives of FCA include:

• Supporting fairer price formation.
• Increasing transparency in the trading process.
• Reducing unhealthy market volatility.
• Providing a trading mechanism tailored to stocks with specific characteristics.

By matching orders only at designated times, FCA creates a more structured price discovery process than continuous trading.

How Does the Full Call Auction Mechanism Work?

Under the FCA system, investors can still submit buy and sell orders during the order collection period. However, transactions are executed only after the system determines the most appropriate equilibrium price.

The process generally consists of the following steps:

• Investors submit buy and sell orders during the order collection period.
• No transactions occur while orders are being collected.
• At the designated auction time, the system determines the equilibrium price that best matches supply and demand.
• All eligible orders are executed simultaneously.

During the order collection period, investors can also monitor the Indicative Equilibrium Price (IEP) and Indicative Equilibrium Volume (IEV), which provide estimated execution prices and trading volumes that may result from the upcoming order matching process.

Which Stocks Are Typically Traded Under FCA?

The FCA mechanism is generally applied to stocks listed on the Special Monitoring Board in accordance with Indonesia Stock Exchange regulations. These stocks are traded under a different mechanism due to their specific trading characteristics.

Typical characteristics include:

• Meeting criteria established by the Indonesia Stock Exchange.
• Having unique liquidity conditions or trading characteristics.
• Being subject to special circumstances that require a different trading mechanism.

 How Does FCA Affect Investors?

Because FCA uses a different trading mechanism, investors should adjust their trading strategies accordingly. Important considerations include:

• Liquidity may differ from that of regularly traded stocks.
• Stock prices do not move continuously during market hours.
• Entry and exit strategies require more careful planning.
• The stocks remain tradable, but through a different execution mechanism.

How to Monitor FCA Stocks

Before investing in FCA-designated stocks, investors should understand the trading status that applies to the stock. Key information to monitor includes:

• Stock status and trading notation.
• Trading activity.
• Market data and developments.

You can also stay informed about stock performance, company announcements, and market insights through Mandiri Sekuritas to better understand the characteristics of FCA trading before making investment decisions.

The Full Call Auction (FCA) is a trading mechanism designed to facilitate fair and orderly price discovery for stocks with specific trading characteristics. Understanding how FCA works enables investors to better assess market liquidity, evaluate potential risks, and make more informed investment decisions. 

By investing through Growin’ by Mandiri Sekuritas, you can access market information and investment insights that help you understand various stock trading mechanisms and invest with greater confidence. 

 

Frequently Asked Questions (FAQ)

Q: Can all stocks be traded using the FCA mechanism?

A: No. Only stocks with specific characteristics determined by the Indonesia Stock Exchange, such as those with low liquidity or special trading conditions, are eligible for trading under the FCA mechanism.

Q: How does trading FCA stocks differ from trading regular stocks?

A: Investors trading FCA stocks must wait until the scheduled order matching session, meaning prices do not change in real time. This creates a more structured trading process compared with continuous trading, where prices can change every second.

Q: Can FCA influence investor psychology?

A: Yes. Because there is a waiting period before orders are executed, investors often have more time to analyze market information and make thoughtful decisions without the pressure of constantly changing prices.

Q: How should investors interpret IEP and IEV in FCA trading?

A: Indicative Equilibrium Price (IEP) and Indicative Equilibrium Volume (IEV) provide estimates of the execution price and trading volume likely to result from the upcoming auction. Investors can use these indicators to anticipate potential execution outcomes.

Q: Can FCA help prevent price manipulation?

A: FCA can reduce opportunities for price manipulation because all buy and sell orders are collected before being executed simultaneously at the equilibrium price, resulting in a price that more accurately reflects overall market supply and demand.