Capital market bill states stronger law enforcement

Capital market bill states stronger law enforcement

JAKARTA (JP): The bill on the capital market will provide a stronger base not only to ensure fair trading but also to encourage trading activities.

Bacelius Ruru, chairman of the Capital Market Supervisory Agency, said yesterday that the stronger investigation power to be endowed to the agency would make law enforcement more effective.

Speaking at a seminar on the bill on the capital market, Ruru said that the clearer definition about trading frauds such as insider trading and price manipulation would enhance the fairness, efficiency and liquidity of the market.

The bill, which will be submitted to the House of Representatives in March, will have 16 chapters and 123 articles. It will replace the outdated 1952 Capital Market Law.

The current law is not only too brief but also too weak to cover the rapid development in capital market activities, Ruru said.

Another important aspect in the draft law is the inclusion of a legal base for the introduction of a book-entry settlement system, he said.

"The introduction of the book-entry system would not only stimulate trading activities but could also reduce transaction costs," he said in the seminar, held by the Panca Marga youth organization.

Investors, under the book-entry trading system, more popularly called scripless trading, would no longer need to keep their shares, as their stock holdings would automatically be booked on their electronic stock accounts, Ruru said.

Small investors

The agency's chairman said that the new law would also provide small-scale investors with a greater opportunity to be involved in stock trading activities.

The introduction of the open-end investment funds will give more opportunity for small investors as the new investment facilities would be less risky, he said.

I Putu Gede Ary Suta, also an executive of the agency, told the same seminar that the bill would enforce a stricter sanction against unregistered financial intermediaries and a stronger penalty to those involved in trading fraud.

"People involved in price manipulation will, for example, receive heavy punishment," Putu said.

The introduction of the new capital market law is a priority in the agency's programs, in addition to the improvement in the professionalism of the capital market supporting agencies.

Many local securities, for example, still lack commitment in research activities, he said, adding that another weakness of the local securities firms is their inability to take great benefits from the big role of the foreign investors on local stock markets.(hen)