Wed, 28 Jun 2000

JSX share price spread revised

JAKARTA (JP): The Jakarta Stock Exchange (JSX) will change the price spread in share trading to Rp 5 from the existing Rp 25 early next month, according to JSX president Mas Achmad Daniri.

Daniri said here on Tuesday that each point of the JSX Composite Index -- starting on July 3, 2000 -- would be worth Rp 5 to achieve improved market liquidity.

"We expect an increased trading volume following the change of the price spread to a lower denomination. This is what happened to other bourses in other countries when they did the same," Daniri said.

He said the change in the price spread was also accompanied by a revision in the maximum price with which share bidders could make bids on top of a market price of a certain share.

The existing rules allow bidders to make a maximum bid of Rp 200 (equivalent to eight points based on the Rp 25 price spread) on top of the existing market price of a share.

With the new rule in place, Daniri said, companies would be broken into three groups.

The first group will comprise companies with a share price of less than Rp 500 each. In this group bidders will have a maximum bid of Rp 50.

The second group will comprise companies with share prices between Rp 500 and Rp 5,000. Bidders in this group will be allowed to make a Rp 200 maximum bid on top of a share market price.

And the third group will comprise companies with a share price above Rp 5,000, with bidders being allowed to make Rp 500 maximum bids, according to Daniri.

Daniri said the way the companies were grouped would create fairer play in share trading, and better yet would prevent market manipulations. (udi)