Makindo sees bright future for online stock trading

JAKARTA (JP): The country's first securities company offering online stock trading, PT Makindo, expects to attract one million clients in the next five years.

"Indonesia has no problem coming up with one million investors," Makindo president Gunawan Jusuf told reporters on Saturday during a seminar and training session on online trading here.

Gunawan said that if Internet trading campaigns continued, the company might have attracted one million investors by the year 2005 or even 2003.

Internet stock trading, or online trading, allows stock investors to place, buy or sell orders or check real-time market information over the Internet.

Given the Internet's character, investors can place orders at any place and at any time, by using cellular phones, for example.

Gunawan said that with the easy access to real-time market information, investors could make better investment decisions and learn to evaluate their portfolio privately, without relying upon brokers.

"The kind of information that cybertrade allows investors to see was once only accessible to brokers. The information is in- depth and real time," he said.

Furthermore, Gunawan said, Internet trading could cut transaction fees down to only one fifth of normal trading fees.

He said that commission fees charged by brokers were normally between 0.3 percent to 0.5 percent of the transaction value, while Makindo charged only 0.1 percent.

But he added that the full potential of online trading was still awaiting the implementation of remote trading, which is currently being prepared by the Jakarta Stock Exchange (JSX).

According to existing trading regulations, investors can only carry out stock transactions through brokers.Investors must submit online orders to Makindo, which then executes them on the trading floor, Gunawan said.

"Brokers carry out instructions straight from the Internet ... but it is still a two-stage process," he said.

However, he said, once JSX applies its remote trading system, investors can immediately make orders without Makindo or a brokers' help.

"The presence of floor traders in the New York Stock Exchange for example is only a showcase, the majority of transactions occur outside the bourse (through remote trading)," he explained.

He said that with remote trading, investors could expect much faster executions of their orders. "We're talking minutes here, and in stock trading a minute can make a big difference," he said.

Gunawan said that stock exchanges in other countries had already adopted remote trading as well as Internet stock trading.

On the prospect of Internet stock trading, he said that Makindo was aiming at investors living outside Jakarta, including individual foreign investors.

With the implementation of wider provincial autonomy, he estimated that more investors would come from outside Jakarta.

Company corporate secretary Luhut Silalahi said that since its launch in April, Makindo's online trading had attracted over 1,000 clients. But only 250 of them were active, he added.

Asked why Makindo was investing in Internet trading while the stock market was still bearish, he answered that gloomy times held the best investment opportunities.

He said that Makindo had spent some Rp 50 billion (US$5.6 million) to develop the Internet trading system. He hoped the company would break even by the year 2003.

At Makindo's website, investors can look up not only real-time stock quotes, but also market and stock analyses, review their portfolios and orders, read companies profiles and news, among other things.

The company also offers basic stock quotes to clients on wireless application protocol (WAP) enabled mobile phones. (bkm)