Jakarta stock mart defends its high transaction fees
Jakarta stock mart defends its high transaction fees
JAKARTA (JP): The president of the Jakarta Stock Exchange (JSX) has defended its high transaction fees, saying the manager of the capital market needs a large amount of funds for its expansion programs.
"We remain committed to being a non-profit making institution. The funds generated from the transaction and listing fees will be used to finance the establishment of a remote trading system and equity participation in a clearing and guarantee house," Hasan Zein Mahmud told reporters here Friday.
Hasan made the statement in response to criticism saying that the high level of various fees -- including those for underwriting, listing and financial auditing services -- has made floating companies on the Indonesian capital market very expensive.
He explained that out of the 0.07 percent fees charged on share transactions, the JSX keeps only 60 percent and the other 40 percent goes to the Indonesian Securities Clearing Depository (PT KDEI).
Because the new capital market law, which came into effect on Jan. 1 this year, stipulates the split of KDEI into two different institutions -- a clearing and guarantee house and a central custodian house -- the JSX must become the majority shareholder of the clearing and guarantee house, he said.
"The JSX also needs Rp 15 billion (US$6.5 million) for its equity participation in the clearing and guarantee house," he said.
Hasan acknowledged that the JSX currently keeps savings of Rp 28 billion in the form of banking deposits but said that it also needs to spend another Rp 7 billion on the establishment of a remote trading system.
President Soeharto, in his inaugural speech at the operation of the JSX's Jakarta Automated Trading System last October, urged the bourse to start the operation of remote trading this year in a bid to expand the domestic-investor base.
Indonesia is estimated to have only about 400,000 domestic investors on the Jakarta capital market.
Cost reduction
Hasan suggested that costs for initial floatation can actually be reduced by lowering the fees of public accountants, lawyers and other related services needed for going public.
A survey conducted by the Indonesian Business Data Center (PDBI) showed that the lowest fees charged by public accountants in Indonesia are about Rp 40 million. The survey even noted that one company had paid Rp 800 million for accountancy services.
A noted source from public accountants Prasetio, Utomo & Co. told The Jakarta Post that the fees for accountancy services in Indonesia are actually about 50 percent lower than those in Singapore and Hong Kong.
However, Hasan said that the JSX might consider lowering its transaction fees to about 0.06 percent this year if various parties continue urging it to do so.
"But any fee reduction may mean a delay for the establishment of a remote trading system," he warned.
Hasan also denied rumors that the JSX touts a large portion of brokerage fees.
"The JSX gets only 15 percent of brokerage fees paid by investors," he said. (08)