Futures commodities exchange receives poor response
JAKARTA (JP): The Jakarta Futures Exchange, the country's first futures commodities bourse, has received a poor response from investors since the commencement of its operations in December of last year.
Ridwan Kurnaen, the chairman of the Commodities Futures Exchange Supervisory Board (Bappebti), said on Monday that the lack of interest was partly due to the low public awareness of the bourse's potential.
He said that the transaction volume recorded by the exchange was very small with an average of 7 lots a day for olein and 3 lots a day for robusta coffee.
With such transaction values, the new exchange would not be able to survive or to serve as a benchmark for the country's commodities market, he said at a futures trading workshop.
From the start of its operations on Dec. 15 until Jan. 25, the exchange booked transactions of only 218 lots or 4,360 tons of olein, and 91 lots or 455 tons of robusta coffee.
One lot comprised 20 tons of olein and 5 tons of robusta coffee.
JFX director J.W. Sudomo said many investors or traders were still reluctant to enter the market until the exchange proved itself capable of promoting fair and transparent trading activities.
"In addition, the people who are well satisfied with an established exchange will be more reluctant to trade elsewhere," he said at the workshop.
Sudomo explained that a sluggish start was commonplace in bourses, and that people should not expect a newly established bourse to achieve success overnight.
Sudomo cited the development of the Jakarta Stock Exchange which needed 15 years before it could operate effectively.
The JFX was established in August 1999 but only began trading on Dec. 15 last year after a number of setbacks involving technical and administrative problems. The bourse offered robusta coffee and olein as its initial commodities.
Sudomo said that the limited number of products traded on the bourse, currently still confined to olein and robusta coffee, has also contributed to the slow trading.
He said that the JFX felt inhibited by the law which stipulates that the commodities traded on the bourse have to be approved by Bappebti, and must be formalized by a presidential decree.
"But that is the law, a bad law that should be changed. In the meantime we will abide by it while screaming from the rooftops for a change," Sudomo said.
To date, the government has approved the trading of six commodities: crude palm oil (CPO) including olein as its derivative, coffee, pepper, cacao, plywood, and rubber.
Sudomo said that the bourse is constantly keeping an eye out for potential commodities other than those already approved by the government.
"We will not ignore a commodity if there is a market for it just because it hasn't been approved by the government," he said.
However, a lack of publicity was not the reason why trading at the bourse had not picked up, Sudomo said, explaining that publicity on its establishment needed time to sink in.
"We are not selling Lux soap, something that someone will immediately want to try out once it's advertised," Sudomo said.
President of clearing house PT Kliring dan Jaminan Bursa Komoditi Surdiyanto Suryodarmodjo said that he hoped that trading would pick up with the physical deliveries of the first contracts on Feb. 15.
"Many investors are waiting for this (physical delivery), to see whether or not it goes smoothly. Afterwards I hope there will be no more hesitation about investing on the JFX," he said.
Concerns have been raised about how long the bourse can survive, especially with its initial capital of around Rp 11 billion being quickly diminished to Rp 6 billion because of the recurring delays in its operations.(tnt)