Govt issues 15 new stock market rulings

JAKARTA (JP): Minister of Finance Mar'ie Muhammad announced yesterday the formation of a stock market custodian and settlement company to facilitate scripless stock trading on the Jakarta Stock Exchange (JSX), expected to start early March.

Mar'ie also announced 15 rulings related to the capital market, including those on new products, asset-backed securities and the Indonesian Depository Receipt (IDR).

The minister said at the Jakarta Stock Exchange (JSX) building that PT Kustodian Sentral Efek Indonesia (KSEI) was set up on Dec. 23 to provide stock custodian and settlement services.

Earlier this year, the government helped establish PT Kliring and Penjaminan Efek Indonesia (PT KPEI) to provide stock-clearing and guarantee services.

"With the establishment of those two institutions, God willing, we'll have scripless trading starting early March next year," Mar'ie said.

The minister also said the 15 new regulations concerning the stock exchange were issued to strengthen the legal foundation for the operation of the exchange.

They would enhance the infrastructure of the capital market and help develop new products.

The rulings introduced asset-based securities and IDR as new instruments in the market.

With the issuance of new rules on asset-backed securities, Mar'ie said, companies wanting to get fresh funds could sell their nonliquid assets, including future earnings, to investors through investment managers and custodian banks.

As for investors, asset-backed securities could serve as an investment instrument alternative.

Besides, the introduction of asset-backed securities would also help increase market liquidity, Mar'ie said.

"Therefore, the issuance of similar instruments through overseas vehicles by local firms could be transferred to local markets to enliven our market," he said.

On IDR rules, Mar'ie said they would provide legal certainty for investors to invest in foreign firms through IDR.

"The presence of IDR will give an investment alternative to Indonesian investors, including employees of foreign firms, especially those which have assets in Indonesia and operate here," Mar'ie said.

To protect the interests of local investors, Mar'ie said, the government would allow only foreign issuers which had been listed in their home countries' stock markets and whose rules were compatible with Indonesian stock market regulations.

The chairman of the Capital Market Supervisory Agency (Bapepam), I Putu Gede Ary Suta, said the introduction of IDR would serve as a stepping stone toward internationalization of the Jakarta stock market.

"Later, we will allow foreign firms to float their shares in our market," Putu said.

There were two foreign firms, one from the United States and another one from Canada, which were prepared to offer IDR through the local stock market, Putu said.

The new rulings also touch efforts to improve professionalism of securities firms and enhance quality of information dissemination. They also govern mergers and acquisitions involving listed firms.

To enhance the professionalism of securities companies, Mar'ie said directors and commissioners could no longer hold positions in two or more companies.

Besides, all directors of securities firms must be licensed brokers.

To enhance transparency, Mar'ie said the rulings required listed companies to send copies of reports and documents sent to Bapepam to the Stock Market Reference Center where the data could be accessed by the public.

Mar'ie said the rulings allowed listed companies to merge with or acquire other companies to improve their performance or even dissolve themselves.

But the rulings required directors of the companies wanting to pursue mergers, acquisitions or dissolutions to protect the rights of public shareholders and employees. (rid)