Restriction on derivatives trading is crucial<\/p>\n
JAKARTA (JP): Senior economists, concerned about world market
\ninstability over the recent Barings crisis, called on the
\ngovernment yesterday to restrict members of the local exchange
\nfrom taking part in derivatives trading on overseas markets.<\/p>\n
Sjahrir, the managing director of the ECFIN financial
\nconsulting firm, said that restricting derivatives trading is
\ncrucial to protect Indonesian investors from incurring huge
\nlosses.<\/p>\n
Speaking during the launching of his book on the prospect of
\nthe Indonesian capital market, Sjahrir warned the Indonesian
\ninvestors not to be lured by the easy promises of derivatives
\ntraders.<\/p>\n
Indonesian investors are mostly engaged in derivatives trading
\noverseas due to the absence of such products on the local market.<\/p>\n
\"We have to be careful about derivatives trading. It is very
\nspeculative,\" Sjahrir said in his comment about the derivatives
\ndealing scandal involving Barings Plc., the London-based merchant
\nbank.<\/p>\n
Barings bank has been placed in administration by the London
\nfinancial authorities after losing more than $750 million in
\nderivatives trading in Singapore.<\/p>\n
Baring Securities Indonesia, an affiliate of the British bank,
\nvoluntarily suspended trading on the Jakarta Stock Exchange (JSX)
\non Monday following the disclosure of the financial crisis of its
\nprincipal company.<\/p>\n
Securities analysts, however, played down the impact of the
\nfutures dealing scandal on the domestic market despite the
\nleading position of the Barings' Indonesian subsidiary in
\nIndonesia.<\/p>\n
\"The people are, of course, afraid about the possible sell-off
\nof Barings' holdings. But I don't think there will a big impact
\non the local exchange,\" said FT Chong, a senior capital market
\nanalyst at Bank Dagang Nasional Indonesia.<\/p>\n
Achmad Daniri, a director of the Jakarta Stock Exchange also
\nsaw no immediate impact of Barings' futures trading scandal on
\nthe local market, saying that the British brokerage company's own
\nportfolio investment on the local market is too small to affect
\nthe market.<\/p>\n
\"Barings' own portfolio investment is not so significant and I
\nthink the impact will be also minimal,\" Daniri said when he was
\nquestioned about a possible Barings sell-off on the JSX.<\/p>\n
Lesson<\/p>\n
Sjahrir, however, said that Indonesian companies should learn
\nfrom Barings' mistake. \"A significant financial loss incurred by
\nseveral Indonesian companies from derivatives trading in the past
\nshould not be repeated,\" he added.<\/p>\n
Sinarmas, a major Indonesian business group, was recently
\nreported to have suffered a huge financial loss from derivatives
\ntrading overseas.<\/p>\n
Marzuki Usman, the chairman of the Association of Indonesian
\nEconomists, described the derivatives -- a future trading
\ninstrument linked to the share price index or prices of
\ncommodities -- as being too alluring due to the high profits they
\noffer.<\/p>\n
\"Many investors, buoyed by lucrative promises, often forget
\nabout the risks of the derivatives trading,\" was how Marzuki
\nassessed the risks of derivatives trading.<\/p>\n
The Capital Market Supervisory Agency (Bapepam) and Bank
\nIndonesia (the central bank) warned Indonesian investors to stay
\naway from speculative derivatives trading.<\/p>\n
\"Indonesian companies should carefully learn about the
\nproducts before getting involved in derivatives trading,\" Bank
\nIndonesia Governor J. Soedradjad Djiwandono said in his recent
\ncomment about the financial losses suffered by several Indonesian
\ncompanies in derivatives trading.<\/p>\n
Bapepam chairman Bacelius Ruru also appealed to Indonesian
\ninvestors not to engage in derivatives trading if they did not
\nreally understand how to \"play with those highly risked financial
\ninstruments.\" (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/restriction-on-derivatives-trading-is-crucial-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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