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)