Brokerage firms urged to sack errant brokers
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)