Bank Pikko trade does not violate trading rule: JSX

JAKARTA (JP): The Jakarta Stock Exchange (JSX) said yesterday that trade in Bank Pikko shares on April 8 did not violate any trading rules despite the stock's astronomical 207 percent rise from Rp 1,300 to Rp 4,000.

Bank Pikko was suspended from trade at 2:23 p.m. on April 8. The bank relisted on April 10 immediately after the April 9 holiday.

"The trading of Bank Pikko's shares did not breach trading regulations and was in line with capital market mechanisms," the JSX's president, Cyrill Noerhadi, said yesterday after the exchange's annual members meeting.

Capital market analysts said Bank Pikko shares were cornered. This happens when one investor has enough shares to enable him manipulate the price.

The shares skyrocketed because several speculative investors, unaware that most of the shares were controlled by one investor, sold short.

Selling short is when an investor sells a stock he does not own, believing he will be able to buy it back later at a lower price, thus profiting from the difference.

But last week Bank Pikko shares did not go down as short sellers expected but kept rising until being suspended.

"Several investors lost a lot of money because they had to buy the shares at a very high price," one analyst said.

Cyrill said if the short sellers failed to deliver the shares they would be penalized by the Capital Market Supervisory Agency.

He said the exchange had asked broking houses that traded Bank Pikko shares to explain what happened.

The agency said the four big broking houses that traded Bank Pikko shares were Danamon Securities, Bhakti Investama, Mashil Jaya Securities and Sassoon Securities.

Danamon Securities traded 1,480,000 shares worth Rp 2.427 billion in 101 transactions. Bhakti Investama traded 1,315,000 shares worth Rp 2.175 billion in 108 transactions. Mashil Jaya Securities traded 1,333,000 shares worth Rp 2.283 billion and Sassoon Securities Indonesia 862,000 shares worth Rp 1.591 billion in 105 transactions.

Broking houses which made big purchases were Putra Saridaya Persada which traded 6,729,500 shares worth Rp 11.038 billion in 424 transactions, Danasakti which traded 4,318,000 shares worth Rp 8.566 billion in 394 transaction, Multiprakarsa Investama which traded 1,045,000 shares worth Rp 2.244 billion in 99 transactions and Bhakti Investama which traded 559,000 shares worth Rp 918,800 million in 70 transactions.

But Cyrill did not want clear parameters for suspending stocks.

He said the characteristics of share prices for each industry and issuer varied.

"There are no fixed parameters that can be used to trigger a suspension," he said.

Under some circumstances a 30 percent rise might be all right and that suspensions had to be approved by the agency.

But the head of the agency's corporate assessment bureau, Herwidayatmo, said the Bank Pikko rise was engineered and took advantage of the exchange's poor surveillance.

"The JSX has the authority to suspend the trading of a share when they find such an unrealistic increase", he said.

The JSX is self-regulatory organization, he said.

The meeting also discussed PT Multibreeder Adirama Indonesia which was suspended at 11:20 a.m. on April 11 after its share price rose 30 percent from Rp 800 to Rp 1,050.

The company's shares relisted later that day. (09)

Related story on Page 11