Observer: Chief executive will determine long-term credibility of Mineral Exchange
The chief executive will help build from the outset the market oversight framework that has the potential to become the price formation venue for Indonesia’s strategic commodities.
Jakarta (ANTARA) - University of Indonesia (UI) Professor and capital market observer Budi Frensidy has said that the position of chief executive is highly strategic, and that decisions made in the first year will determine the long-term credibility of the Mineral and Strategic Commodities Exchange (BMKS).
He added that the position will also help build from the outset the market oversight framework that has the potential to become the price formation venue for Indonesia’s strategic commodities.
“The chief executive will help build from the outset the market oversight framework that has the potential to become the price formation venue for Indonesia’s strategic commodities. Therefore, decisions in the first few years can determine the long-term credibility of the BMKS,” Budi said when contacted by ANTARA in Jakarta on Wednesday.
The name of the BMKS chief executive candidate submitted by President Prabowo Subianto through a Presidential Letter (Surpres) and sent to the Indonesian House of Representatives (DPR RI) is M Sarjito.
According to Budi, M Sarjito’s track record is quite relevant, as he is a long-serving figure at the Financial Services Authority (OJK), having previously served as Deputy Commissioner for Capital Market Supervision and Deputy Commissioner for Education and Consumer Protection.
However, he cautioned that a more substantive fit and proper test is needed for the BMKS chief executive, rather than a mere formality.
“What needs to be tested is not only his regulatory experience, but also his understanding of physical commodity trading, derivatives, price benchmark formation, mitigation of market manipulation, and his independence from industry players,” Budi said.
Regarding the management of the BMKS, Budi stressed the importance of independence, competence, and the prevention of conflicts of interest. He added that BMKS executives and supervisors must be free from the interests of large producers, traders, and political interests.
“Oversight of price manipulation, affiliated transactions, and player concentration must also be strong,” Budi said.
According to Budi, the BMKS can strengthen domestic price discovery, so that Indonesia no longer depends on foreign benchmarks for commodities that are in fact largely produced in the country.
He added that more transparent transactions can help reduce under-invoicing and transfer pricing, improve state revenue, and strengthen Indonesia’s bargaining position in global commodity trade.
He said that the success of the BMKS will be largely determined by liquidity, price credibility, and its governance.
“The most important thing is to create liquidity, a sufficient number of buyers and sellers, price and volume transparency, standardisation of commodity quality, strong clearing and settlement, and derivative contracts for hedging. If transactions are mandated but the market is thin, the prices formed will not become a credible benchmark,” Budi said.
Previously, DPR RI Speaker Puan Maharani had announced the name of the BMKS chief executive candidate submitted by the President through a Presidential Letter (Surpres) and sent to the DPR RI, namely M Sarjito.
Puan said that Commission XI of the DPR RI has been tasked with processing the name in accordance with the applicable mechanisms, provisions, and laws and regulations.
“The name is Mr M Sarjito, who will be processed according to the mechanism in Commission XI,” Puan said.