JSX warns two brokerage firms

JSX warns two brokerage firms

JAKARTA (JP): The Jakarta Stock Exchange (JSX) has discovered that two of its members, PT Erdhika Mulyatama and PT Arya Prada Sekuritas, violated fairness principles when executing a number of transactions on three stocks.

A director of JSX, Stanislaus Say, said in a statement yesterday that the transactions of PT Tembaga Mulia shares and PT Jaya Pari Steel shares on Dec. 28, 1995, executed by Erdhika Mulyatama on the same day, have caused an increase in the shares' prices by 45 percent and 95.8 percent respectively.

The price of Jaya Pari Steel shares was relatively stagnant in July to Dec. 14, 1995, fluctuating in the range of Rp 1,150 (49 U.S. cents) to Rp 1,450. The stock was not traded between Dec. 14 to 27.

But the stock was actively traded in just three minutes before the market closed on Dec. 28 at Rp 2,350.

The two stocks were then recorded as the top gainers in December.

On the same day, Arya Prada Sekuritas also made a similar unusual transaction on Plaza Indonesia shares, which caused the share price to drop by 52 percent.

Plaza Indonesia was an inactive stock with a price of Rp 2,100 on Dec. 26 and Dec. 27. On last year's trading day, Dec. 28, the price dropped sharply to Rp 1,000.

Plaza Indonesia was recorded as the top loser in December.

But on Jan. 2, Plaza Indonesia stock closed Rp 750 higher at Rp 1,750, on the next day the price rose to Rp 2,075 and surged again to Rp 2,100 on Jan. 4.

Stanislaus said that such transactions put investors in a difficult position, because on the next trading day no brokerages wanted to execute investors' orders at the closing price of Tembaga Mulia and Jaya Pari Steel.

"It shows that the brokers have acted unprofessionally in executing investors' orders and have created a bad image for JSX," Stanislaus said.

An article of JSX's trading rule says that the exchange's members have to refuse any customer's orders that potentially create an artificial share price.

However, as the first step, the two brokerages received only a warning. (08)