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)