Proposed bourse merger still up in the air
Proposed bourse merger still up in the air
JAKARTA (JP): The planned merger between PT Bursa Parallel Indonesia (BPI), the company which manages the over-the-counter stock market in Jakarta, and the Surabaya Stock Exchange (SSE) is still up in the air.
Bambang Subianto, chief commissioner of BPI, told journalists after BPI's shareholders' meeting here yesterday that the shareholders had given the team appointed to prepare the merger 60 days to do the job.
"If the team cannot form the merged market within 60 days, it should report and return the mandate to the shareholders," said Bambang, who is also director general of financial institutions at the Ministry of Finance.
Asked about the holdup in the planned merger, Bambang said a number of matters still needed clarification, especially the relationship between the planned merged market and the Jakarta Stock Exchange (JSX).
He said BPI would prefer the relationship to be complementary, meaning that the merged market would serve small and medium-sized companies and act as a bridge for those wanting to list on the JSX.
However, informed sources at the JSX said that the JSX wanted its relationship with the merged exchange to be one of open competition.
The sources said if the JSX accepted BPI's proposal that the two bourses have a complementary relationship, the JSX would have to transfer dozens of its clients, especially those categorized as small and medium enterprises with a paid-up capital of less than Rp 50 billion (US$22.5 million) to the merged market.
Bambang said that the slow progress of the merger plan had a lot to do with the JSX factor.
"We're is still waiting for the JSX's formal response to our proposal," Bambang said, adding that the proposed complementary relationship between the new merged market and the JSX would include trading activities.
In fact, BPI and the JSX already have a complementary relationship in trading activities. Yesterday BPI started trading odd lots -- lots of less than 500 -- of shares which are listed on the JSX because most transactions on the JSX are carried out in trading units of, at least, 500 shares.
No problem
BPI president Tito Sulistio said the handling of the JSX- listed odd lot share trading was no problem for the BPI, since transactions at that bourse are carried out in a trading unit of 100 shares.
BPI was established in late 1990 by the Association of Money and Securities Traders as the first over-the-counter capital market in the country.
The SSE was formed in 1989 as the first privately-owned stock market in the country and the only stock market located outside Jakarta.
However, trading activities on the two exchanges have been sluggish as both investors and share issuers continue to favor the JSX.
Bambang said that if the JSX agreed with his company's proposal for a complementary relationship, there would, practically, be one capital market in Indonesia with two operating companies.
"Our proposal for a complementary relationship is actually aimed at making the market efficient: shares will be more liquid and the formation of stock prices will represent the real condition of the companies," Bambang said.
However, if the JSX rejects the proposal, Bambang said, BPI and the SSE should rethink their merger plan. "If eventually we decide to merge and enter into competition, it has to be fair competition."(rid)