KSEI seeks fresh funds for scripless trading

JAKARTA (JP): PT Kustodian Sentral Efek Indonesia (KSEI) is seeking fresh funds to finance a scripless trading system in the country's two local stock exchanges.

KSEI president Isakayoga said yesterday the company would try to obtain additional funds from shareholders or bank loans.

"We have not decided which option (is best) since both would be difficult at this time," he said, pointing to tight liquidity and high interest rates.

KSEI handles stock clearing and settlements, and acts as the custodian for both the Jakarta and Surabaya stock exchanges. The company is jointly owned by 14 banks, 32 securities houses and two stock exchanges.

The Capital Market Supervisory Agency has tasked KSEI to prepare and operate the planned scripless trading systems, which are planned for both stock exchanges.

Isakayoga said each shareholder had injected between Rp 300 million and Rp 1.5 billion as equity into the company, which at present has a paid-up capital of Rp 30 billion.

He said the funds were far from enough to establish a scripless trading system.

KSEI has been forced to delay its previously scheduled operational date of March 1 for the system due to the shortfall, he said.

The cost of installing the scripless trading system would have totaled between Rp 20 billion and Rp 22.5 billion based on last July's rupiah rate of 2,500 to the U.S. dollar, he said.

However, with the persistent depreciation of the rupiah against the dollar, total funds required to install the system total as high as Rp 80 billion (US$8 million) to Rp 90 billion in rupiah terms due to the fact that most of the components would be billed in dollars.

"Though this is a lot of money, we are confident that scripless trading is urgently needed by the local market," he said.

"We have to do our utmost to find other financial sources," he said.

Isakayoga also indicated that the Asian Development Bank (ADB) or other global finance institutions could possibly provide some of the funding.

The Securities Exchange Commission of the Philippines procured a $70 million loan from the ADB to finance its operation of a scripless trading system late last year.

"I think seeking a loan from the ADB is also another option for us," he said.

He said KSEI had assigned a special team to seek new funding options.

A scripless trading system would first be applied to illiquid stocks in the two local bourses, enabling investors and brokerage firms to transfer stocks and funds through an electronic system without having to physically exchange them. (aly)