Bapepam to rule security trading

JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam) is now preparing at least six rules to regulate asset-backed securities trading.

Agency chairman I Putu Gede Ary Suta said yesterday the rules were needed to ensure the trading of the asset-backed instruments would not hurt the investing public.

"I cannot tell you yet what rules we are working on but for sure they are needed because the trading of the asset-backed securities is still new here," he told journalists after addressing a conference on asset-backed securitization here.

Putu said the regulations on the asset-backed securities trading would cover many aspects such as legal, tax, accounting and the quality of assets and people involved in the asset securitization.

But he declined to say when the trading of the new debt instrument would be launched.

Asset-backed securities are bonds or debt securities collateralized by the cash flow from a pool of either auto loans, credit card receivables, vehicles and equipment leases, consumer loans or other obligations.

Putu said Bapepam had set up two committees -- product development and contingency plan committees -- to prepare the new regulations.

Businesspeople were also invited to join the committee because they would be directly involved in asset securitization.

"Input from businesspeople is welcomed to create reliable trading rules," he said.

He said product development would assess the market's need and observe the trend of asset-backed securities activities in the country and international markets.

"This committee is expected to give input to the agency on how the trading of assets-backed securities are made," he said.

He said the task of the contingency plan committee was to socialize and broaden the public's awareness that investing in the capital market also involved risk.

"The contingency plan committee will socialize the concept that investing in the capital market does not merely offer profit but risk as well," he said. (aly)