Sat, 02 Sep 2000

Delays plague opening of futures exhange

JAKARTA (JP): The Jakarta Futures Exchange (JFX) has again failed to commence trading as the Commodities Exchange Supervisory Board (Bapepti) has delayed the issuance of its operational license.

Bapepti said on Friday that the JFX should again delay its inaugural trading until it completed the required documents and properly prepared all the trading procedures.

"The operational license will be issued when all requirements needed for the trading are properly presented," the agency said in a statement.

The JFX must amend some documents regarding trading regulations and guidelines, contracts and the clearing mechanism.

Bapepti, which studied the JFX's preparation documents with help from a former Kansas City Futures Bourse and a foreign information technology expert, urged the JFX to refine the trading standard mechanism, including the delivery of commodities to be traded.

Bapepti said the JFX management should involve more professional brokers and futures trading experts in drafting its trading regulations and procedures.

JFX director Rico Menayang said last week the futures exchange was technically ready to start trading activities on Sept. 1 as most of the necessary preparations had been completed.

The JFX, which was previously set to open in March, will initially trade crude palm oil and robusta coffee.

Indonesia is the world's largest producer of palm oil after Malaysia and is a major producer of coffee.

Traders say the JFX will help make both markets more transparent and will give them an alternative to Malaysia. At present, Indonesian traders and producers hedge their commodities on the Kuala Lumpur Commodities Exchange.

Rico said the bourse would include other commodities like pepper, plywood, cocoa and rubber in its trading next year and financial trading instruments like foreign exchange, interest rates and government bonds later on.

The JFX was founded in mid-1992 by four palm oil plantations, seven palm oil refineries, eight securities companies and two general trading companies, and has authorized capital of Rp 40 billion (US$5 million) and paid-up capital of Rp 11.6 billion.

It was initially scheduled to start trading in March. But installation problems with its computer system forced the bourse to postpone trading to July, which then dragged on to September.

The idea of introducing futures trading here has been aired since the early 1990s, but it was not implemented immediately as the government was concerned about the possibility of speculators distorting the market.

Bapepti said an independent auditor would examine the condition of all facilities involved in the bourse before finally awarding the license to the JFX. (cst)