House wants changes to capital market bill

House wants changes to capital market bill

JAKARTA (JP): The House of Representatives urged the
government yesterday to revise its capital market bill to ensure
fair trading practices.

The Indonesian Democratic Party asked for changes in the
sections relating to licensing procedures for stock broking firms
and the role of the capital market supervisory agency
(Bapapepam).

Ni Gusti Ayu Eka Sukmadewi, speaking for the party's faction
in the House, said that the licensing procedures for stock
broking companies should be clarified to prevent indirect
involvement of publicly-listed companies in stock trading
activities.

She said brokerage companies which were wholly or partly-owned
by publicly-listed companies should not be allowed to operate on
the domestic stock market in order to prevent insider trading and
other forms of trading fraud, she said in her party's statement
during the opening of debates on the proposed capital market law
in the House's special committee.

Made during the opening debates on the proposed capital market
law, the party's statement was apparently directed towards the
indirect involvement of a number of publicly-listed companies in
stock trading activities.

"Securities companies should not be allowed to have ownership
relationships with other firms engaged in the stock exchange to
guarantee fair trading," Gusti Ayu said.

The PDI, the smallest faction in the House, also called on the
government to revise the provisions concerned with Bapepam's
supervisory role as well as those regarding the accounting system
and penalties.

Listed firms

She said that Bapepam, which, under the proposed legislation,
will oversee companies whose shares are owned by more than 300
parties with a minimum paid-up capital of Rp 3 billion -- whether
or not they are listed on the capital market -- should focus its
supervisory attention only on listed firms, she said. She said
that if the government wanted the agency to supervise non-listed
public firms as well, it should think of different name.

Regarding penalties, Gusti Ayu said that the sanctions for
capital market crimes should be clearly defined to prevent
misinterpretation.

The United Development Party also asked the government to
revise the licensing procedures for the capital market supporting
agencies, including broking companies, underwriters and fund
managers.

H. Muchsin, spokesman for the party's faction in the House,
said that Bapepam concern itself with supervisory tasks, while
the issuance of licenses should be handled by the ministry of
finance.

Finance

Muchsin said that the draft law, which would provide Bapepam
with greater authority, does not make any stipulations regarding
the agency's financial powers.

"The draft law should also give Bapepam stronger powers in its
financial management to enable it to support its greater
supervisory tasks," he said.

The draft capital market law, submitted to the House late last
month, will be debated by the House's special committee until
Oct. 22.

The draft law, which is scheduled to be implemented in
January, will replace the 1952 Capital Market Law. The new law,
which contains 16 chapters and 123 articles, covers not only the
legal bases for all activities on the capital market but also
provisions in relation to capital market crimes.

For example, the bill provides Bapepam with greater
investigative powers and introduces heavier penalties, in the
form of both terms of imprisonment and fines. The maximum term of
imprisonment under the proposed law is five years, while the
maximum fine is Rp 15 billion (US$6.7 million).

Bapepam, which at present is allowed to investigate only
written reports, will be permitted to carry out field
investigations in dealing with suspected capital market
crimes. (hen)