JSX formulating system to protect public interests
JAKARTA (JP): The management of the Jakarta Stock Exchange (JSX) said yesterday that it is now preparing a more sophisticated surveillance system aimed at enforcing the protection of public interests.
"We are now trying to improve the quality of both our system and our human resources," JSX's president, Cyril Noerhadi, told journalists here after a seminar on introduction to the capital market.
He promised that the JSX will set a ceiling for price movements on any one trading day, which will be used as an indicator of unusual trading.
"But it's not public information so I don't have to tell you the ceiling that we have established," he added.
An investigation team from the Capital Market Supervisory Agency (Bapepam), headed by a bureau chief at the agency, I Nyoman Tjager, found out recently that the alleged insider trading in Bank Mashill shares, which took place in early April, was made possible by JSX's poor surveillance.
In the deals of Bank Mashill shares, a director of the bank, Jensen Koharjo, was accused of insider trading because of his position as a commissioner in PT Sumatra Central Prima, one of the bank's major shareholders, which sold its position in the transactions.
The JSX, however, failed to detect Jensen's role in the transactions and to get information from the bank about it.
Based on its findings, Bapepam has instructed the JSX's management to improve its surveillance system.
A former director of the JSX, Stanislaus Say, said that the JSX should be restructured to improve its market surveillance role.
He said that under the current structure, the JSX's surveillance department can not take any quick action because any contact with listed companies is under the authority of the listing division or trading department.
"I would say that in the efforts to improve the surveillance system, the supervision department should have the authority to contact both the JSX's members and the listed companies," Stanislaus told The Jakarta Post yesterday.
Meanwhile, Bapepam's chairman, I Putu Gede Ary Suta, told journalists after the same seminar yesterday that the agency would further enforce the protection of the investing public and would prevent any unfair practices.
Putu also confirmed that the agency has never prevented investors from conducting high risk practices such as margin trading.
Margin trading is considered to carry high risks because investors take the risk of price movements.
"It's the market's decision. We have never banned the practice of margin trading because it also helps to increase the transaction volume on the stock exchange," Putu said.
However, he said he was doubtful whether market players are properly prepared for the risks that come with this practice.
Putu also said that more investors would become interested in investing in the stock market if the existing market players gave the public the impression of honesty.
In a meeting with executives of securities companies last week, he urged the securities firms to start opening client accounts on the brokerage office because this would also facilitate market surveillance.
"It's interesting that the daily transaction volume increased significantly, to an average of Rp 200 billion (US$85 million) currently. Unfortunately, most big deals were done through cross transactions, not on regular board," he said.
"This implies that investors are more confident about direct negotiations than trading on the market," he added.
Moreover, Putu said, although the transaction volume has increased, the number of client accounts in the brokerage house has yet to increase.
"So it also seems that brokerage houses might have played their own portfolios," he added.
He said that such practices most stop. (alo)