JATS, a quantum leap for Jakarta Stock Exchange

JATS, a quantum leap for Jakarta Stock Exchange

With the operation of the Jakarta Automated Trading System
(JATS), a quantum leap in handling transactions has been taken.
Inaugurated yesterday by President Soeharto, JATS has actually
been operable since last May 22, marking a new era of scriptless
trading on the JSX. JATS serves as an integrated system
connecting trading, clearing and settlement, depository and
broker accountancy.

During the four-month implementation of JATS, trading
activities at the JSX have increased accordingly. Daily trading
activities increased by almost 40 percent to 2,490 transactions
per day by the end of August from 1,780 transactions before the
implementation of JATS. Total trading volume increased by 25.8
percent to 42.8 million shares per day worth Rp 140.19 billion
(US$61.6 million) by August from 34.05 million shares worth Rp
107.12 billion per day.

Hasan Zein Mahmud, president director of JSX, said by the end
of this year trading frequencies on JSX are expected to double to
between 4,000 and 5,000 transactions per day worth some Rp 200
billion.

He noted that JATS will help realize the vision of JSX to
become one of the largest exchanges in the Asia Pacific region
with a strong base of domestic and foreign investors.

To increase domestic investors' participation in the capital
market, Hasan said JSX plans to launch a remote trading system,
accessible through JATS, next year.

"This move must get full support from brokers and securities
houses. If they are reluctant to open branches at the cities
where remote trading facilities are available, such trading
facilities will not be effective to net local investors," Hasan
said.

He promised that JSX would give incentives to securities firms
which open branches outside Jakarta. Free information from JSX is
one such incentive.

There are currently 197 securities houses acting as exchange
members and shareholders in the JSX with each shareholder owning
one share. They consist of underwriters, broker-dealers and
investment management companies. Several international brokerage
firms have established subsidiaries through joint ventures with
Indonesian companies.

Enormous potential

JATS is an automated and integrated system of stock trading
which incorporates the procedures currently followed by JSX and
PT Kliring Deposit Efek Indonesia, the independent firm
responsible for clearing and settlements. As its main element and
backup, JATS uses a pair of Hewlett Packard 9000, model G50
computers with client-server architecture.
"With JATS, JSX solidifies its place as the exchange with an
enormous growth potential in Southeast Asia," says Marzuki Usman,
chairman of the Jakarta Stock Exchange after its activation last
May.

The JATS core is the Trading Engine which acts as the main
central processing unit to serve as exchange supervisor, broker
firm manager, trader, broadcaster of data, as well as statistical
and historical database.

JATS enables market participants to monitor the index
constantly. Quicker trading leads to more liquidity in the
market, thus making it attractive to both domestic and foreign
investors. In turn, a liquid market minimizes the hesitation
investors might have about participating in the market. Moreover,
remote trading is processed on an equal basis with orders from
the trading floor, except for computer response time.

JATS also accelerates the institutionalization of the capital
market by remote trading, allowing the brokers to access the
market electronically from cities around the country. This has
resulted in an increase in participation of domestic investors.

The remote trading galleries provided by PT Bursa Efek Jakarta
include a viewing room with TV walls displaying real-time trading
information, and reference rooms equipped with research materials
on listed companies and the capital market as a whole. Counselors
are available to help potential investors better understand the
trading system. It has been observed that face to face trading
provides a better psychological climate, allows easy supervision
and provides more opportunities for improved service to brokers.

While trading is fully automated now that JATS has come on-
line, JSX does not operate as a floorless exchange. Broker desks
and a center counter still remain the focus of activity.

"We decided that a marriage of the physical exchange and the
latest electronic trading methods was the most appropriate
approach to best serve our local and international investors,"
explained Mas Achmad Daniri, the JSX director responsible for
implementing the new system.

"By continuing floor trading, we ensure uninterrupted
transactions should there be a break in the electronic system,"
he added. It was also decided that, besides providing a better
psychological climate, face to face trading allows easier
supervision and provides more opportunities for improved service
to brokers.

Articles in this section are complied from materials prepared
by Sheila Natesan and Riyadi.