Price intervention just temporary measure: Bapepam
Price intervention just temporary measure: Bapepam
JAKARTA (JP): Chairman of the Capital Market Supervisory
Agency (Bapepam) Bacelius Ruru said Saturday that the agency's
price intervention is just a temporary measure.
He said the price intervention is aimed at protecting the
investing public and that it will be removed when the market is
more mature.
Bapepam limits prices of shares on the primary market to a
maximum of 13 times the price earning ratios to protect the
investing public from a high price dilution on the secondary
market.
"The most important thing is how to promote the transparency
in stock trading activities," Ruru said in a meeting with The
Jakarta Post at his office.
During the meeting, Ruru made a correction on the Post's
article on Bapepam's price intervention published on Saturday.
Bapepam has no plan at all to defend its price intervention
policy, Ruru said, adding that price intervention in Indonesia,
an emerging market, is imposed as a temporary remedy.
In his address at the end of a three-day international
conference on the capital market Friday, Ruru said that an
adequate legal framework is also essential to protect investors'
interests.
"Furthermore, the market must be sufficiently transparent to
ensure investors equal access to accurate material information,"
he said.
Accuracy
The Bapepam chairman said a company may legitimately raise
capital from the public even for the most risky investment as
long as full and accurate disclosure is provided.
By providing sufficient financial disclosure, it is believed
that informed investors will be able to make competent investment
decisions in accordance with their needs, he said.
Ruru said the shifting of the Indonesian capital market ruling
from the so-called merit system to a disclosure system is also
important in better protecting the investing public.
A disclosure system assumes that investors are able to make
intelligent investment decisions if they are given sufficient and
truthful information regarding public companies, he said.
"The disclosure system also assumes that investors need
assistance from the government only in assuring that the
information is available, not in evaluating the information," he
said.
Ruru said that, in contrast, the merit regulation scheme is
based on the assumption that investors lack the capability in
making intelligent decisions on their own as to whether to buy,
sell or hold securities.
The so-called disclosure system means to induce more mature
and responsible markets by demanding diligence from market actors
and professionals, he explained. (hen)