Surabaya bourse prepares plan to find own identity<\/p>\n
JAKARTA (JP): The Surabaya Stock Exchange (SSX), which at
\npresent acts more as a trading arm of its rival, the Jakarta
\nStock Exchange, is wrestling to find its own identity.<\/p>\n
A new business strategy, with emphasis on widening the local-
\ninvestor base and attracting local companies to list their shares
\non the market, is being prepared.<\/p>\n
\"Coordination with capital market supporting agencies will
\nalso be improved to fulfill the target of becoming an independent
\nstock exchange,\" Isakayoga Cakra Hudamara, the newly elected
\nchairman of the bourse, announced recently.<\/p>\n
The promise to turn the SSX into a more independent market is,
\nin fact, not new at all. However this time, it is, at least,
\nconveyed to lessen growing criticism over the bourse's future.<\/p>\n
The SSX has operated for almost seven years but its
\nactivities still rely much on a \"subsidy\" given by companies
\nlisted on the Jakarta Stock Exchange (JSX).<\/p>\n
It might be the reason why many investors and those who care
\nabout the development of the country's capital market are more
\ncritical when asking about the its future.<\/p>\n
Some of them question the logic of maintaining its operation.
\nOthers want the Surabaya exchange merged with the JSX.<\/p>\n
\"I think it is no longer relevant to maintain the operation of
\nthe Surabaya exchange. It is economically unviable,\" a noted
\nsecurities analyst told The Jakarta Post.<\/p>\n
He said the SSX is able to survive only because of the
\n\"undisguised subsidy\" from companies listed on the JSX.<\/p>\n
He may possibly be right because it is an open secret that
\nalmost all companies listed on the JSX are \"obliged\" to cross-
\nlist their shares on the SSX. Without such an unwritten
\ninstruction, the Surabaya bourse could not exist.<\/p>\n
The SSX was established in 1989 as the first private stock
\nexchange operator in the country. It was to cater to the growing
\nnumber of small and medium-scale companies in the region and to
\ngive capital market access to local investors.<\/p>\n
To support the idea, the Capital Market Supervisory Agency
\n(Bapepam) -- which during that time still directly managed the
\nJSX -- required all companies listed on the JSX to cross-list
\ntheir shares on the newly established Surabaya market.<\/p>\n
The double listing facility, which was initially to be only on
\na temporary basis to support the baby bourse, was extended even
\nthough the JSX was privatized in 1992. The extension of the
\ndouble listing requirement created more financial and
\nadministrative burdens to share issuers because, unlike
\npreviously, they had to pay for additional listing costs.<\/p>\n
For share issuers, cross-listing on the SSX is not
\neconomically viable at all, given the small number of local
\ninvestors. In fact, around 70 percent of the transactions made on
\nthe SSX takes place in its Jakarta office.<\/p>\n
Out of the 199 firms listed on the SSX, 189 come from the
\nJakarta stock market. The remaining 10 companies originated from
\nthe dissolved over-the-counter market or those, which are no
\nlonger qualified for the JSX.<\/p>\n
Client-firms<\/p>\n
It shows that the SSX has failed to generate any client-firms
\nduring its seven years of operation, except a number of bond
\nissuers.<\/p>\n
\"If we had options, we would not list our shares on the SSX.
\nAs you know, stock trading there has been practically dormant all
\nthe time,\" a corporate secretary of a listed company said.<\/p>\n
The fact that around 70 percent of the share transactions on
\nthe SSX were made through its Jakarta trading office gives the
\nclear impression that without the helping hand of its Jakarta
\nshare issuers and buyers, the SSX would be unable to survive.<\/p>\n
Trading activities on the SSX are mostly in the form of cross-
\ntransactions, deals done outside the trading floor which are
\ngenerally conducted by institutional investors. Other
\ntransaction activities, such as those made through auctions or
\nover-the-counter dealings, remain inactive as investors prefer to
\ndeal with more the active and fluid JSX despite the lower
\ntransaction fees offered by the SSX.<\/p>\n
The weekly trading volume of the SSX totaled only around 70.38
\nmillion shares late last month, less than 10 percent of the
\nweekly trading volume of 716.03 million shares booked by the JSX
\nin the same week.<\/p>\n
\"The JSX and SSX not only have the same shares to sell but
\nalso have similar buyers. So why should we separate them?\"
\nanother analyst queried.<\/p>\n
Basiruddin A. Sarida, one of the founders and a former
\npresident of the SSX, argued that the operation of the SSX should
\nnot be narrowly based on business logic.<\/p>\n
\"There is more important things than that...the image of the
\ncountry,\" he said. \"Moreover, a big country like Indonesia should
\nhave more than one stock market.\"<\/p>\n
His vision of having a regional bourse is brilliant, but to
\nmake the SSX viable is another matter. Basiruddin, who was at the
\nhelm of the bourse for nearly seven years, proved that to fulfill
\nhis dream would be an uphill battle. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/surabaya-bourse-prepares-plan-to-find-own-identity-1447893297",
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