Reporting system urged for state bond tradings

Reporting system urged for state bond tradings

The Jakarta Post, Bandung

A senior official of the Surabaya Stock Exchange (BES), where
trading in corporate bonds takes place, has proposed a regulation
requiring all government bond transactions to be reported to the
exchange in order to make the bond market more transparent.

BES president director Bastin Purnama said all transactions
involving government bonds should be reported to the exchange on
a daily basis, just as transactions in corporate bonds have to be
reported to the Capital Market Supervisory Agency (Bapepam).

"At present, the BES records about Rp 1 trillion worth of
transactions involving government bonds every day, while actually
the total value of transactions could reach up to Rp 2 trillion.

"This means that many traders are not reporting their
transactions to the BES," he said over the weekend on the
sidelines of a media workshop on risk management in Bandung, West
Java.

He said the figure of Rp 2 trillion had been obtained from the
central bank, where government bonds are traded.

Government bonds are traded over the counter (OTC), which
means they are traded outside the exchange.

There should be a regulation so that traders have to report
every transaction they make to the exchange so that the real
price of the bonds can be accessed and assessed by the public,"
he said.

"In the United States, trading in government bonds was
commonly OTC, but traders there had to report their transactions
within hours of their taking place."

Bastian believed that the recent crash in that has affected
the mutual funds industry was partly caused by a lack of
transparency in the government bonds trade.

"The total asset value of mutual funds is now heading toward
Rp 20 trillion, while last week it was still over Rp 40 trillion.
This is partly caused by a lack of information on government bond
transactions in the market," he said.

The lion's share of mutual funds use government bonds as their
underlying assets.

He urged Bapepam to require such reporting to support the
creation of transparent capital markets here. "That's why we
established the exchange in the first place: to create a well-
regulated, transparent and liquid market."

Such a reporting requirement could also support the use of the
Indonesian Government Securities Trade System, which had been
established to promote transparency in the country's capital
markets.

At the moment, reporting was done only on a voluntary basis,
said Bastian. (006)