JFX ready to face new competitors

JFX ready to face new competitors

JAKARTA (JP): The Jakarta Future Exchange (JFX) said the
opening of Indonesia's second futures commodities exchange next
month would not undermine its operation.

JFX director J.W. Sudomo said on Wednesday the planned
operation of the Jakarta Commodities Exchange (Jacom) would help
promote the country's infant futures trading market.

"In the short term, there will be no competition at all
because the two exchanges will trade different commodities," he
told The Jakarta Post in an interview.

Trade at the JFX, which started business in December last
year, remains sluggish, with daily trading volume still far lower
than hoped.

The exchange currently is allowed only to trade olein and
robusta coffee. It has booked total trading volume of 218 lots of
olein, or 4,360 tons, and 91 lots of coffee, or 455 tons, since
opening on Dec. 15.

One lot of olein comprises 20 tons and a lot of robust coffee
is five tons.

Sudomo said the exchange's daily trading volume was still far
below the ideal level, shown by the fact that the transaction
fees received from traders was still more than enough to cover
operating costs.

But he believed trading activities would increase as more
people became aware of the existence of the bourse.

He said that in the long term, especially after trading became
more active, the two exchanges would be better off merging to
create a better synergy, not only in cutting operational costs
but also in providing services to traders.

Jacom, established by a number of local commodities traders,
plans to start operations next month. The exchange will initially
trade rubber and cocoa.

Under government regulation, commodity exchanges are allowed
to trade six commodities: robusta coffee, olein, rubber, cocoa,
plywood and pepper.

Both bourses have applied for licenses to trade all six of
these commodities.

Joko Prianto, the president of the task force working to make
Jacom operational, rejected the idea of merging the two futures
exchanges.

"Let us compete against each other ... we prefer to operate
independently," he said after a visit by several members of the
House of Representatives to his office on Thursday.

Joko said he and several other sponsors of Jacom initially
proposed joining JFX, but the proposal was rejected.

In addition, he said Jacom would have a different trading
system, which would make it difficult to merge with the JFX.

He said Jacom, through its operator PT Bursa Komoditi Jakarta,
was still trying to get the necessary government permits to begin
operations as planned.

Jacom has to obtain the approval of the justice ministry
before it can receive a permit from the Commodities Exchange
Supervisory Board.

Joko said he was optimistic Jacom would receive the permit by
the end of February because all of the requirements had been
completed, and the exchange had the support of the House.

To date, Jacom has 50 members, though it is targeting 200
members, he said.

Jacom is hoping for a total trading volume of 4,100 lots in
rubber and cocoa within the first month of its operation. "In the
following months we are confident we will reach 200 lots daily."

Each lot of cocoa and rubber is five tons.

Joko said approximately Rp 10 billion ($1.05 million) had been
invested to establish Jacom. (05)