Fri, 04 May 2001

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)