Firm line up for futures bourse

JAKARTA (JP): The futures commodity exchange, which is expected to open here early next year, will involve about 25 brokerage companies, a senior trade official said yesterday.

The chairman of the Commodity Executive Board, Arifin Lumban Gaol, said the brokerage companies would handle all transactions on the exchange.

"The brokers will carry out trading on behalf of both traders and producers," he told a seminar in Medan on futures trading.

"The bourse will open in Jakarta and will initially trade two agribusiness commodities: rubber and coffee," he said.

The Ministry of Trade and Industry proposed a futures-trading law to the House of Representatives late last month for ratification.

Arifin said the bill would set the legal foundations for a domestic futures commodity bourse, which the government had planned long ago but postponed because of controversy.

Many people had reportedly opposed futures commodity trading, arguing that it was gambling.

He said futures commodity contracts would be effective marketing tools for producers and investors to anticipate losses caused by price fluctuations.

The government hired several consultants, including Sparks Company of the United States, to study the feasibility of a futures bourse.

According to Sparks, a futures trading exchange would cost between Rp 11.8 billion (US$5 million) and Rp 23.6 billion to set up and Rp 3.54 billion a year to run.

Its break-even point could be reached in two to four years with fees for each transaction set between Rp 4,700 and Rp 11,800, the company said.

Arifin said earlier that palm crude oil and cacao had the potential to be traded on the bourse, and other commodity producers were also welcome to sell their products on it. (04)