Brokerage firms urged to sack errant brokers
JAKARTA (JP): Securities companies should establish an internal control system to monitor their employees, Chairman of the Capital Market Supervisory Agency (Bapepam) I Putu Gede Ary Suta said yesterday.
Putu said that the agency has discovered a number of cases and disputes caused by unprofessional brokers.
"A number of brokers have traded shares in their own portfolios and not for their clients, or they execute their clients' orders through other brokers and not at their own brokerage houses," Putu added.
"How can a brokerage house survive if its own staff members are no longer loyal to the company?" Putu said in his keynote address at a recent discussion.
Putu also warned securities firms not to employ brokers or dealers who do not have licenses issued by the agency or who have been fired from other firms.
"It should not have happened that an errant broker in one company turned out to be a hero in another company. But it happened here," he said.
Bapepam, according to Putu, will blacklist any errant brokers and tighten the procedures for licensing new brokers. New brokers will also be examined for their understanding of capital market programs which are described in the capital market's blue print.
Healthy brokerage
Putu said that the capital market blue print stipulates that securities firms should improve capital soundness and enhance the security of share transactions and the quality of services.
"It seems to me that the market players are not active in materializing what has been outlined in the blueprint," he said.
He said that Bapepam has considered revoking the licenses of 11 inactive brokerages by the end of this year and to take action that will not allow unprofessional brokerages to survive.
"Once again, I urge you to start by opening client accounts in your offices. If you can't do that, then why should we (Bapepam) authorize margin trading."
He said that as an enforcement measure, the agency is likely to prevent investors who do not have accounts at brokerage houses from buying shares on the primary market.
Responding to Putu's statement, the chairman of the association of securities companies, Yannes Naibaho, told journalists after the discussion that the association is willing to help its members to comply with Bapepam's guidelines.
"But I should say that it is not easy for all securities firms to open client accounts in their offices. The point is the gap of capital between investors," Yannes said.
He said that investors will prefer to move to other brokerages if they are required to open accounts.
Commenting on Putu's warnings on errant brokers, Yannes said that it would not be easy to prevent brokers from committing illegal practices.
Yesterday's discussion was attended by the managements of both the Jakarta and Surabaya stock exchanges, Chairman of the Indonesian Public Companies Association Rosano Barack, the president of Indo Exchange, Scott Coffey, and Chairman of the Jakarta Brokers Club Nurkhamid Akhmad. (alo)