Futures exchange law will ensure fair play: Tunky
Futures exchange law will ensure fair play: Tunky
JAKARTA (JP): Minister of Trade and Industry Tunky Ariwibowo
reasserted yesterday that the proposed law on the futures
commodity exchange would not let a single exchange member
dominate trade.
"The bill will, for example, include clauses which prevent the
possibility of excessive speculation," he said in response to
questions from the House of Representatives on the bill.
The minister said the government's bill on futures commodity
trading would protect producers and traders by letting them hedge
their positions.
The long-awaited bill was submitted in December and
yesterday's plenary session was its third round of talks.
"The bill restricts the amount of transactions that an
individual can make and stipulates that he or she must submit a
report (to the market's supervisory board) before reaching the
maximum allowable level," Tunky said.
Tunky said the futures market could only operate smoothly and
efficiently if its players practiced freely and transparently
without intervention by "external parties".
"There should be a guarantee that the market will involve
enough buyers and sellers, that transactions will be transparent
and that it will not be dominated by a single player," he said.
Tunky said that commodities sold on the market would have to
be of a certain quality.
The market's traders and brokers must know about futures
trading and have the required skill and expertise, he added.
The bill states that a futures commodity exchange will be
supervised and controlled by the government's Commodity
Supervisory Board under the Ministry of Industry and Trade.
The government has not yet established the board but it is
likely that the Commodity Bourse Executive Board, which operates
the country's commodity exchange, will take on the supervisory
task.
The supervisory board, according to the bill, will have the
right to establish technical rules, provide licenses to the
exchange's brokers, carry out investigations and approve
regulations issued by the exchange and its clearing and guarantee
agency.
The board will stipulate financial requirements and impose
administrative penalties on violators of the futures commodity
trading law, if the bill is passed.
Tunky acknowledged yesterday that, although the bill was meant
to protect farmers and small producers from price fluctuations
and risk, it would be difficult for them to have direct access to
the futures market.
He said this was because their businesses were too small and
their knowledge too limited.
He hoped that one day Indonesia's futures market would be
useful to farmers and their cooperatives, such as those in the
United States and Japan.
"Up-dated information on prices provided by the futures market
helps them to decide when to produce and sell their products at a
desired price," he said.
The government's bill has been opposed by many analysts who
doubt whether the exchange can operate efficiently.
Some observers also fear that the market will be dominated by
groups such as members of the Association of Indonesian Coffee
Exporters and the Federation of Edible Oil and Fats, which
produce the commodities which are likely to be the first to be
traded on the futures market. (pwn)