Govt submits bill on futures trading
Govt submits bill on futures trading
JAKARTA (JP): The government finally submitted its long-
awaited bill on futures commodity trading yesterday to the House
of Representatives.
Minister of Trade and Industry Tunky Ariwibowo said the bill
would basically provide a legal foundation for futures commodity
trading.
"The bill is necessary to follow trade globalization," the
minister told a House plenary session while the bill was
presented to House members.
The draft law on the futures trading was planned long ago but
was postponed because of its controversy. Many people have
opposed the futures market, arguing it was gambling.
The proposed law states a futures commodity exchange would 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 the Commodity Bourse Executive Board, which operates the
country's commodity exchange, would take on the supervisory task.
The supervisory board, according to the proposed law, would
have the right to establish technical rules, provide licenses to
the exchange's traders, carry out investigations and approve
regulations issued by the exchange and its clearing and guarantee
agency.
The board would stipulate financial requirements and impose
administrative penalties on violators of the futures commodity
trading law.
The bill states that no single group would be allowed to
dominate the futures exchange. This would be done by restricting
traders' affiliated companies from becoming members at the
exchange.
Tunky said using market instruments to manage price risks, as
was done in futures trading, was not against the rules of the
World Trade Organization, the ASEAN Free Trade Area and the Asia
Pacific Economic Cooperation forum.
"This means we will have no problem applying these market-
management instruments in free trade," Tunky said.
He said the bill would be debated until March 31, 1997, and a
futures commodity exchange was expected to open by the end of
1997.
Chairman of the Commodity Bourse Executive Board Arifin Lumban
Gaol said yesterday the bill aimed to create a solid market
mechanism for futures commodity trading and prepare the domestic
commodities market for liberal regional and global trade.
"So while we liberalize our trade, businesses involved in
futures trading may also have a mechanism that will not
contradict the practices of a market economy," Arifin said.
House members are scheduled to give their views on the bill on
Jan. 16, 1997. The drafting of the bill into law, upon the
House's approval, is scheduled to take place on March 31.
The bill says the futures market will be operated by private
companies under the supervision of the supervisory board.
Sparks Company of the United States has been commissioned by
the government, World Bank and two commodity associations to
study the feasibility of a domestic futures exchange.
Sparks Company concluded a futures trading exchange would cost
between US$5 million and $10 million to set up and $1.5 million
to run each year. (pwn)