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)