Govt to tighten control of brokerage companies

Govt to tighten control of brokerage companies

JAKARTA (JP): The government will soon issue a new regulation
to tighten the supervision of stock brokerage companies operating
on local stock exchanges, sources said.

They said that the planned regulation will, among other
things, require a securities firm which fails to meet existing
bourse membership requirements within three months sell its seat
at a stock exchange to other securities firms.

However, if the unqualified member fails to find a buyer of
their seat in three months, it will have to delegate an auction
to the exchange operator, according to the regulation now being
prepared by the Capital Market Supervisor Agency (Bapepam).

If the exchange operator also fails to find a buyer within
three months, the inactive firm will be required to sell the seat
to the stock exchange operator at a nominal (face) value.

A director of the Jakarta Stock Exchange (JSX) said that a
seat at the JSX is now worth about Rp 1.7 billion (US$737,847),
far higher than its nominal value of Rp 60 million.

The JSX estimated that around 70 of the 197 securities firms
listed on the bourse lost money last year. During the first six
months of last year, 97 firms reported losses and 84 booked
profits.

The other 16 of the JSX's members have been categorized as
being inactive due to their low transaction activities in the
last 12 months. Thirteen of them are licensed as broker-dealers,
two are licensed as broker-dealers and underwriters, and the
other one holds a license as a broker-dealer, underwriter and
investment manager.

The inactive firms are Aperdi, Artha Adyanugraha, Arya Shinta
finance, Asprina Prima Sentosa, Dangajah Sakti, Garudapara
Invesindo, Henan Putihrai, Interindo Danapraya, Jalurwahana
Artha, Metro Sukma Securities, Namalatu Renesina, Nikki
Asiasecurindo, Putra Master Sekuritas, Sato Securities, Sekurindo
Pratama and Srikandi Sekuritas Invesindo.

A noted source at the JSX said that the planned new regulation
is essential to anticipate tighter competition in stock brokerage
activities.

A number of major foreign securities companies have been
licensed to operate on the local market, including Merrill Lynch
of the United States, which started operations this month.

He added that one securities firm from South Korea and four
from Malaysia have disclosed their intentions to look for seats
at the JSX. (08)