Wed, 22 Nov 2000

First futures bourse gets permit to start operation

JAKARTA (JP): After months of delays, the government said on Tuesday that it had decided to issue the operating permit for the Jakarta Futures Exchange (JFX), the country's first futures trading bourse.

Head of the Commodities Futures Exchange Supervisory Board (Bappebti) Arifin Lumban Gaol said on Tuesday he planned to sign the operating permit later in the day.

"Today Bappebti will sign the operating permit and will meet the JFX (The Jakarta Futures Exchange) to ask them what their plans are after receiving it," Arifin told reporters on the sidelines of a meeting between the Ministry of Industry and Trade and the Indonesian Chamber of Commerce and Industry (Kadin).

He said that the JFX must report to Bappebti about their preparations prior to the start of trading activities.

"Is it possible that they (JFX) might delay their operations again? There are no more excuses for a delay," he added.

The Jakarta Futures Exchange (JFX), established in August 1999, was initially scheduled to start trading in March but computer installation problems forced the exchange to postpone trade until July.

The exchange promised to start business in September yet failed to obtain Bappebti's operating permit as scheduled.

JFX President Hasan Zein Mahmud threatened earlier this month to resign if Bappebti did not issue the permit by the end of this year.

But Arifin said there were several reasons why his office had refused to grant JFX its operating permit.

Among them were the incomplete future contracts, trading and delivery procedures and problems with JFX computer system, he explained.

JFX director Rico Manayang said the exchange had completed all the requirements as demanded by Bappebti.

The completion of the futures contracts took some time because Bappebti rejected several of JFX's drafts, he went on.

A futures contract contained, among other things, the terms and conditions of the commodities sold, he explained.

The commodities to be traded at the JFX are crude palm oil and Robusta coffee.

The JFX, he continued, also signed contracts with three firms that provided warehouse services in several parts of Indonesia.

Traders, he said, could only use the warehouses of firms that were listed at the JFX.

He said that with a permit out on Tuesday, the exchange could start operating next week or even this Friday.

"We will begin with a two-week trading simulation," he told The Jakarta Post.

Rico said the exchange would invite the public for the trading simulation by placing announcements in several media.

"It's going to be just like real trading, involving all related parties and institutions," he said, citing Bappebti, clearing houses, traders and settlement banks.

He said that a soft launching of the JFX, could follow soon after the simulation was completed.

According to him, Bappebti had also yet to appoint the settlement banks. He said that the agency had shortlisted Bank Niaga, Bank Internasional Indonesia (BII) and state owned Bank Mandiri.

Rico further confirmed that the government had recently issued a presidential decree allowing the trading of pepper, plywood, cocoa and rubber. But he fell short of saying when the decree was issued.

Rico said that despite the decree, JFX had no plans yet to expand its trading to these commodities, except maybe for plywood.

"We will follow the market, if there is demand we will expand to these commodities," he said.

The JFX was founded by four palm oil plantations, seven palm oil refineries, eight securities companies and two general trading companies.

It has an authorized capital of Rp 40 billion (US$4.25 million at the current rate) and paid-up capital of Rp 11.6 billion.

Aside from the JFX, another group of commodities traders also planned to open a futures commodities exchange for the trading of rice, sugar, soybeans, tobacco and cotton.

However, Arifin said his office could not issue an operating permit for the second exchange because the commodities that would be traded by this exchange had yet to receive the President's approval.

"So far they (the second exchange) have not applied for an operating permit," he added.(bkm)