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)