JSX considers bonds to finance remote trading

JSX considers bonds to finance remote trading

JAKARTA (JP): The Jakarta Stock Exchange (JSX) plans to issue
bonds or commercial papers worth up to Rp 23.5 billion (US$2.11
million) to help finance the development of its remote trading
system this year.

JSX president Mas Achmad Daniri said here on Thursday that the
exchange would raise extra funding because the Rp 11 billion
already allocated to finance the project was no longer
sufficient.

"The budget for the project has increased to Rp 23.5 billion,
mainly because of the stronger U.S dollar," Daniri told reporters
following the exchange's annual shareholders' meeting.

Proceeds from the bond release, which is still awaiting
approval from the JSX's board of commissioners, would be partly
used to fund the shortage, with any remaining revenue used to
bolster cash flow.

The JSX plans to implement a remote trading system by August
this year. The new system will allow traders from outside Jakarta
to access the stock market and participate in on-line trading.
Consequently, the presence of a trading floor will become
obsolete.

Daniri said that seeking external funds was among several
alternatives the JSX had considered to cover the budget deficit.

One option included offering a profit-sharing scheme with
contractors engaged to build the remote trading system.

"They (the contractors) would build the system, and get paid
later from income earned through remote trading," Daniri said.

He added that the JSX actually had an adequate cash flow to
finance the project, but preferred using external funding in
order to maintain a comfortable cash position.

In addition to receiving transaction and membership fees from
securities brokerage companies, the JSX also receives fees from
listed companies.

Last year, however, a surge in operational costs resulted in
the JSX suffering a net loss of Rp 4.99 billion, compared to a
net profit of Rp 16.41 billion a year earlier.

This year's escalating political tension has posed a major
blow to the JSX, with the uncertainty provoking a plunge in the
transaction volume.

Daniri said that use of the remote trading system would
significantly reduce its operating costs because, once the new
system is applied, the existing trading flour is no longer
needed.

"The absence of a trading floor delivers operational savings
of Rp 4 billion a year," he said.

Newly-elected JSX commissioner Avi Y. Dwipayana of PT Trimegah
Securities said that commissioners would investigate whether
extra funding was necessary.

"We'll see how much the remote trading will cost us. Whether
it's Rp 23.5 billion remains to be seen," he said.

Thursday's annual shareholders meeting saw the election of
five new commissioners, who have all been appointed until 2004.

Replacing Erry Riyana Hardjapamekas as the JSX's chief
commissioner is Bacelius Ruru, who was nominated by the capital
market institutions.

Bacelius, currently head of the Jakarta Initiatives Task Force
(JITF), is a former chairman of the Capital Market Supervisory
Agency (Bapepam).

The JSX's new vice commissioner is an executive at PT Merrill
Lynch Indonesia, Lily Widjaja, who represented securities firms
along with Trimegah's Avi.

The other two commissioners elected were Made Rugeh Ramia and
Sri Indrastuti Hadiputranto, who represented listed companies and
stock market professionals respectively. (bkm)