'Maintain investors' trust'

JAKARTA (JP): President Soeharto inaugurated the Jakarta Automated Trading System (JATS) on the city's capital market yesterday, calling on related parties to maintain investors' trust in domestic capital markets by giving them increased protection.

"I ask the capital market authority to maintain and enhance investors' trust," Soeharto said at the inauguration ceremony at the Jakarta Stock Exchange's (JSX) trading floor.

"If the investors don't trust on (local) stock markets, they will easily transfer their funds to capital markets in other countries."

Soeharto also called on the management of stock exchanges to run the markets efficiently so that public companies which seek funding from the markets can grow healthily.

He suggested that the stock market management charge market players the necessary fees only. In such a way, Soeharto said, local stock markets will have a competitive edge.

"It is necessary for me to speak of this matter because the aim of our stock markets is not merely to collect profits but also to provide services so that the stock markets can run normally, properly and efficiently," Soeharto said.

Indonesia currently has two stock exchanges, the JSX in Jakarta and the Surabaya Stock Exchange in Surabaya, both of which are run by privately-own limited liability firms.

Concern

Soeharto also expressed concern over the relatively small number of domestic capital market investors, which number only 200,000, or 0.1 percent of the country's total population.

"This number is much lower than those in other countries in Asia. This situation requires us to find ways of supporting domestic investors so that they can play more pivotal roles on local stock markets," he said.

Soeharto noted that an exchange with a strong basis of domestic investors would make a substantial contribution to the country's economic development.

In order to attract more people to enter the stock markets, Soeharto stressed the necessity for publicly-listed companies, as well as those which have already fulfilled the requirements for becoming public companies, to uphold the principles of information disclosure.

Another way to net more domestic investors, especially small ones, Soeharto said, is by forming mutual funds; either open- ended or close-ended.

He said having stock trading automation like JATS serves as another way to increase the number of domestic investors.

At the same ceremony, Minister of Finance Mar'ie Muhammad explained that JATS serves as an integrated system connecting trading, clearing and settlement, depository and broker accountancy. JATS is also supported by a sub-system handling trading surveillance, membership, listing and data management.

Mar'ie said the automation of the JSX started on May 22, when trading was carried out for the first time using computers. In the fourth quarter of this year, he said, new trading functions will be introduced, including the installation of a surveillance system and trading support systems.

The next phase of the JSX's automation, Mar'ie said, will be commenced next year by introducing remote trading, by which investors from outside Jakarta will be able to carry out stock transactions from their home towns.

The final phase of the automation, which is expected to also be ready next year, is the introduction of scripless trading, in line with the book entry settlement of custodian institutions and clearing houses.

In accordance with the implementation of JATS, Mar'ie said, the JSX has gradually developed networks with its information centers in cities outside Jakarta, the SSE's trading galleries, custodian firms and clearing houses, as well as with data vendors, including the Antara and Reuters news agencies. (rid)

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