Stock trading automated<\/p>\n
Efficiency, liquidity and transparency were some of the key
\nwords in President Soeharto's address at the inauguration of the
\nJakarta Stock Exchange's automated trading system yesterday. The
\nJakarta Automated Trading System (JATS), which began trial
\noperations last May, is designed to increase the frequency and
\nvolume of transactions, thereby minimizing errors in
\ntransactions, reducing costs and, consequently, improving
\nefficiency.<\/p>\n
The system speeds up transactions dramatically by
\ncomputerizing order routing and execution, thereby increasing
\nmarket liquidity and making the stock exchange more attractive to
\ninvestors. Soeharto said the stock exchange will be performing
\nits function properly and well when it can provide a transparent
\nmechanism and protection for the investing public.<\/p>\n
The new system ensures that investors are treated fairly and
\nefficiently in the handling and execution of orders. It is
\neffective in maintaining and developing liquidity in new markets.<\/p>\n
Even though there are many other factors which influence
\ninvestors' decisions to buy shares, such as market conditions,
\nliquidity and interest rates, fair and efficient treatment of
\ninvestors is one of the prerequisites for broadening the base of
\ndomestic investors on the Jakarta stock exchange (JSX). Today, as
\nthe President noted, the JSX is faced with the major challenge of
\nincreasing the number of domestic investors.<\/p>\n
A broad base of domestic investors is required, he said, to
\nenable the JSX to play a bigger role in efficiently raising and
\nmobilizing private savings. A greater number of domestic
\ninvestors is also needed to increase market liquidity, in the
\nsense that entry to and exit from particular shares can be made
\nefficiently and speedily.<\/p>\n
Moreover, the present situation, in which daily trading is
\ndominated by foreign portfolio investors, is not conducive to the
\nfuture development of a sound stock market. Recent experiences
\nhave shown that foreign investors often fail to act rationally
\nand can make decisions on the strength of wild rumors.<\/p>\n
Further down the line, a larger number of domestic investors
\nis also needed to help improve the JATS' operation through high
\ncapacity utilization. The JATS is designed to route and execute
\n40,000 orders and process 50,000 transactions every hour. During
\nthe four months of trial operations, the largest number of orders
\never handled by the system in one whole day was only 10,000.<\/p>\n
Consistently with the fast developments in information
\ntechnology, the JATS offers virtually unlimited opportunities for
\nfurther developing the stock market. An opportunity that will
\nsoon be able to be tapped is remote trading. That will contribute
\ngreatly to broadening the base of domestic investors, as people
\nin other provinces will be able to deal in stocks on the JSX. The
\nnext advance will be the development of scripless trading, as
\nalready practiced on many international stock exchanges.<\/p>\n
The JATS also contributes greatly to facilitating fast flows
\nof information through on-line communications, something which is
\nvery important in view of the crucial role of timely and accurate
\ninformation in developing a sound stock market.<\/p>\n
The introduction of the JATS will undoubtedly place the JSX on
\na level with the stock exchanges in other markets. Even though
\nthe JSX is still the smallest stock market among the ASEAN
\ncountries -- with only about 230 listed companies and a total
\nmarket capitalization of approximately US$58 billion -- the
\nopportunities for market expansion are huge, given the predicted
\nrobust growth of the economy in the years to come and the massive
\nvolume of investment funds that will be required.<\/p>\n
It is a happy coincidence that the JATS' inauguration took
\nplace a day after the passing of a new law on the stock exchange,
\nwhich provides a stronger legal foundation for the development of
\nthe stock market and better protection for the investing public.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/stock-trading-automated-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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