Indonesia's first futures exchange scheduled to open in March

JAKARTA (JP): Indonesia Futures Exchange (IFEX), the country's first commodity futures exchange, will begin trading in March next year, the exchange's president Hasan Zein Mahmud said on Thursday.

"We will have seven months from now to develop the computer system, trading regulations and other supporting infrastructure for IFEX to start operating," he said at the official launch of the exchange.

The country's long awaited first futures exchange IFEX was finally established by its 29 founding members on Aug. 19 after more than an eight-month delay.

Hasan, the former president of the Jakarta Stock Exchange (JSX) said that he was glad that Indonesia would soon open its first commodity futures exchange.

Indonesia as a natural resource-rich country, he said, badly needed a commodity futures exchange to help its commodity producers, manufacturers, exporters and end-users in managing their risks against unpredictable price fluctuations.

Through the futures bourse, commodity producers could protect themselves from a drop in prices by signing a contract to sell their crop at a certain date in the future at a prearranged price, he said. "If the price drops before that date, producers will not suffer any losses," he added.

Hasan said that the management office and the trading floor of IFEX would temporarily be located at Menara Kadin Indonesia building, floor 25.

Minister of Industry and Trade Rahardi Ramelan, who attended Thursday's launch, said that the futures exchange management should study other commodities that could be included in the exchange trading.

"Corn and plywood for example could be considered to be included on the futures exchange trading as well," he said.

The futures exchange is only permitted, based on the 1999 presidential decree No. 12, to trade palm oil and coffee.

Rahardi said that it was possible for the exchange to trade more than these two commodities at the initial stage of the exchange operations.

IFEX has an authorized capital of Rp 40 billion (US$5.2 million) and paid-up capital of Rp 11.6 billion.

The establishment of IFEX is based on the 1997 Commodity Futures Exchange Law, while its operational guidelines are expressed in the 1999 government regulation No. 9 on commodity futures exchange.

IFEX's operations is supervised by the Indonesian Commodities Exchange Agency (Bapebti), which is under the auspices of the Ministry of Industry and Trade.

Commodities clearing houses PT Kliring and PT Jaminan Bursa Komoditi, and commodities traders and brokers will also help in IFEX operations. (udi)