Index-linked futures trading to open on SSX

JAKARTA (JP): The Surabaya Stock Exchange (SSX) will introduce trading in futures contracts next year to provide greater investment opportunities on the country's second stock market.

The president of the SSX, Anton Natakoesoemah, said here on Tuesday the futures contracts would be based on the LQ45 Index, the price barometer of the 45 most actively traded shares on the Jakarta Stock Exchange.

"Investors can use the index-linked futures contracts as their equity investment hedging tools," Anton said following the signing of a cooperation agreement between the SSX and JSX.

Under the agreement, the Surabaya bourse will be allowed to use the LQ45 Index as the reference for its futures contract trading.

JSX president Mas Achmad Daniri welcomed the launch of futures trading, saying it would enable investors to protect their investments.

"Investors can offset the risk exposure of taking a bullish view in their equity investments by taking a bearish view through a futures index contract," he said.

Daniri also praised the use of the LQ45 Index as the reference for futures trading, saying the index reflected the prices of the most actively traded shares on the exchange.

Shares included in the LQ45 Index currently account for some 80 percent of total daily trade on the JSX and are reviewed every six months to ensure they meet minimum standards.

Anton said the JSX would soon seek the approval of the Capital Market Supervisory Agency (Bapepam) for the index-linked futures contracts trading.

"After receiving Bapepam's approval, we will go abroad to conduct a comparative study of countries that already have experience in such futures contracts trading," he said.

Most of the shares listed on the SSX are cross-listed with the JSX. The SSX also will began trading government bonds next year. (udi)