Securities houses should strengthen capital: Bapepam
JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam) yesterday urged shareholders of small local securities houses to inject fresh funds to strengthen their capital.
The agency's chairman, I Putu Gede Ary Suta, said about 100 of the 214 securities houses at the Jakarta Stock Exchange were operating with a weak capital base.
If these firms did not increase their capital now, they would find it hard to handle the increase in trading activity, Putu said.
"When trading value at such a company reaches Rp 2 trillion (US$821 million) a day, disputes could increase ten times," Putu said at the signing of an agreement to promote capital market and venture capital.
Participating in the agreement were the Surabaya Stock Exchange, the associations of issuing companies, accountants, lawyers, securities firms and rating firm PT Pefindo.
But Putu ruled out the possibility of his agency making it compulsory for securities houses to increase capital.
Securities houses, by regulation, are required to have a minimum paid-up capital of Rp 10.5 billion.
"If I make it compulsory, I'm afraid the owners of those securities houses would just include their houses as capital. We don't want such fixed assets, we want net adjusting working assets," Putu said.
Putu also called on registered accountants and lawyers to adopt international standards and stick to their professional codes of ethics to increase disclosure in the capital market.
"If you, accountants, find a company is doing financial engineering against the generally-accepted accounting principles, you must say no to the company. Don't leave it to us reject a report," Putu said.
He also called on lawyers to check and recheck every word in a company's prospectus, to protect the issuing company from any potential litigation from investors.
Putu said that to enhance trading activities on local stock markets, the agency would help materialize scripless trading of securities on both Jakarta and Surabaya stock markets.
The agency would issue licenses to PT Kliring Penjamin Effect Indonesia (clearing and guarantee firm) next month and to PT Kustodian Depositori Efek Indonesia (central securities depository) later this year to back up scripless trading.
"We hope institutionalization for scripless trading is completed this year, in accordance with our blue print, and that scripless trading itself starts early next year," Putu said.
The two institutions will be the backbone of scripless trading activities. Their establishment was mandated by the 1995 capital market law.
Currently all securities trading is done electronically, but settlement is still done manually.
"Pursuing scripless trading itself is an easy job. But to ensure safe trading is not. Therefore, we must first establish a secure system before we can start scripless trading," he said.
Surabaya Stock Exchange's president, Isakayoga C.H., said his bourse would start partly-scripless trading on bonds next month.
He said all going-to-be-issued bonds would be kept in a custodian bank, and all tradings on the bonds would be conducted electronically and settled through book-keeping. (rid)