Crisis a big hurdle for scripless trading
Crisis a big hurdle for scripless trading
JAKARTA (JP): Jakarta Stock Exchange (JSX) has delayed the
introduction of scripless trading for financial reasons, an
exchange director said here yesterday.
Ahmad Daniri said that the new trading system, scheduled to
start this month, was very costly.
Most exchange members could not afford to finance the project
and to procure new equipment to support the system, Daniri said.
"There are things that need to be discussed in detail again,"
he told The Jakarta Post.
A special team has been preparing the scripless trading system
since last year. The team is comprised of several stock exchange
members and the president of PT Kustodian Sentral Efek Indonesia
(KSEI), Isakayoga.
Isakayoga said the funds required to install the system had
unexpectedly increased as a result of the sharp depreciation of
the rupiah against the U.S. dollar.
The total cost of installing the scripless trading system was
between US$8 million and $9 million.
"The investment was based on a rupiah rate of 2,500 to the
American dollar, the rate last July,' he said.
Now, with a substantially weakened rupiah, the total cost of
installing the system would amount to between Rp 80.4 billion and
Rp 90.4 billion, based on yesterday's dollar closing rate of
10,400, "and that's a lot money," Isakayoga, a former president
of Surabaya Stock Exchange (SSX), said.
KSEI held a meeting with PT Kliring and Penjaminan Efek
Indonesia (KPEI), brokerage houses, securities companies and the
JSX and SSX managements yesterday to discuss the problem.
"Introducing scripless trading is a necessity for the local
markets. So everything has to be planned precisely so as not to
harm the investors in the local market in the future," Isakayoga
said.
"Hopefully scripless trading will be applied by the end of
this year, or if possible after June," he added.
Scripless trading will allow investors and brokerage firms to
transfer stocks and funds through an electronic system without
having to deal with the stock and funds physically as they
currently have to.
Under the initial plan, scripless trading will first be
applied to illiquid stocks and then gradually introduced to more
liquid stocks.
The system will enable investors in the capital market to
transfer shares and funds smoothly and efficiently through an
assigned custodian bank.
Currently a brokerage firm has to physically deliver stocks to
the seller, who in turn must settle the payment directly with
buying brokerage firms.
He said the scripless trading team was considering seeking
finance for the system from banks and leasing companies.
"But seeking loans will be difficult as the interest rate is
so high," he said.
Nurkhamid, president director of Argaartha Securities, said
that he understood the delay given the worsening economic
situation in the country.
"At present securities companies will have problems purchasing
equipment to support the new trading system," he said.
Scripless trading require brokerage houses and securities
companies to invest an additional US$12,000 to $15,000 in
upgrading their back office technology.
Chairman of the scripless trading committee Surdiyanto
Suryodamodjo said late last year that the introduction of
scripless trading in the local markets was expected to boost
transactions on the local bourse. (aly)