JSX members need Rp 250m to participate in remote trading
JSX members need Rp 250m to participate in remote trading
By Berni K. Moestafa
JAKARTA (JP): Each securities firm at the Jakarta Stock
Exchange (JSX) must invest at least Rp 250 million (about
US$26,500) in new technology to keep up with JSX's plans to
implement remote trading later this year, the exchange said.
The JSX president Mas Achmad Daniri said that on top of the
initial investment of Rp 250 million, brokerages must also set
aside some Rp 150 million each year for operation and maintenance
costs.
"These figures are of course only an estimate," Daniri said
during a press meeting on Friday.
He said the exchange had conducted studies on what securities
firms needed to upgrade to remote trading, and how much they
would have to spent on building the system.
The JSX plans to implement remote trading starting next
August. Under a remote trading system, traders from outside
Jakarta can access the stock market and execute on-line trading.
Consequently, the presence of a trading floor will become
unnecessary.
Securities firms must also revamp their front end system from
where they receive transaction orders from their clients.
The back office system, a system that handles the settlement
of the market transactions, will largely remain unaffected.
"Companies must invest in new hardware, software and a
network," Daniri said, adding: "the bourse's trading system must
be able to communicate with its members (the securities firms)."
Under the planned remote trading system, securities firms will
connect to a network switch, which would route the transaction
orders to the JSX's main trading engine.
Securities firms must also lease a remote trading port, the
cost of which JSX is currently calculating.
To date, the JSX lists 197 securities firms as its members.
"Some securities companies are already advanced in their
preparations, while other smaller ones have to start to build
from scratch," he explained.
Daniri added that because of the current economic
difficulties, some firms may not be willing to invest in remote
trading now.
But he assured that the JSX planned a gradual adoption of the
system, and would allow securities firms ample time to prepare.
Although remote trading is scheduled for next August,
securities firms would have until the year 2003 to fully adopt
the system.
"The point is, that when they (securities firms) are ready, we
are ready," he said.
As part of JSX's preparations, he continued, the exchange was
now tendering the development of a trading protocol system and
the computer network.
"We have 24 companies who have submitted their tender
proposals," he said, "of these 24, two will be chosen for the
development of a trading protocol system and a network."
He declined to name the JSX's budget for the new systems,
saying the information was confidential due to the current tender
process.
Based on the JSX's project schedule, it expects to complete
the tender process by February.
While awaiting the development of a new protocol and a
network, the JSX plans to introduce the public to remote trading.
The JSX estimates that by next April, it will have a new
protocol system and a new computer network implemented.
In June, the exchange will conduct a pilot project to test the
new system, while also ending its remote trading campaign.
As for the securities firms, the JSX will introduce them to
the overall trading system in March, and start registering them
for remote trading the following month.
By July, the exchange will audit the securities firms'
preparations, hold training sessions, and start the
implementation process.
The exchange plans to officially start remote trading on its
birthday, Aug. 10.
"We want to offer our traders and investors something new on
our birthday," Daniri said.
He added that the exchange would keep its trading floor active
until the year 2003, until securities firms were fully prepared.
Securities firms joining remote trading can book higher gains
from increased transaction orders through on-line trading,
according to the JSX.
They could broaden their customer base to other provinces,
simplify transaction procedures, reduce human error during
transactions, and make quick and more accurate reports to their
clients.
The JSX would enjoy similar benefits from more transactions,
and an improved efficiency of its market.
Daniri has said that the implementation of remote trading was
necessary to tap the potential of local investors outside
Jakarta.
Since the Indonesian stock market has lost its appeal to most
foreign investors, Daniri has repeatedly emphasized the need to
strengthen local investors.
He also said that remote trading would bring Internet stock
trading to its fullest potential.
Among the local securities firms offering Internet stock
trading, is PT Makindo which has 250 clients trading over the
web.
Makindo director Gunawan Jusuf has said that with remote
trading, investors could expect much faster execution of their
orders through the Internet. "We're talking minutes here, and in
stock trading a minute can make a big difference," he explained.
(bkm)