Govt issues 15 new stock market rulings

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)