SSX faces closure as financial woes worsen

SSX faces closure as financial woes worsen

SURABAYA (JP): The financially strapped Surabaya Stock
Exchange (SSX) might have to cease operating if existing
shareholders refuse to inject fresh funds into the East Java-
based stock market.

Hindarmojo Hinuri K., an SSX director, said here on Monday
that the exchange's management had formally asked shareholders to
inject Rp 27 billion (about US$2.5 million) in additional funds
to keep the exchange afloat.

"That is one of the three options that have been forwarded to
shareholders to deal with the exchange's financial difficulties,"
he told The Jakarta Post.

The second option is to continue the operation of the bourse
using existing financial resources. He refused to reveal the
third option which he described as being very conservative.

The SSX, the country's second stock exchange after the Jakarta
Stock Exchange, has suffered acute financial problems since the
economic crisis hit the country in late 1997.

The management had been engaged in massive cost-cutting
measures to allow the exchange to continue its operations but the
continued slowdown in the local stock market has resulted in
further income losses, Hindarmojo said.

He said that the daily transaction volume on the stock
exchange was only about Rp 10 billion at present, far lower than
the original projection of Rp 60 billion.

With the sharp drop in transactions, the exchange has to rely
solely on listing fees to maintain its operations.

"Although we receive stable listing-fee income of about Rp 100
million per month, this is still far from enough to cover
operating expenses and salaries," Hindarmojo said.

He said that the shareholders would soon meet to decide what
action could be taken to cope with the exchange's losses.

The Surabaya stock exchange, which is equally owned by its 23
stockbroking companies, started to operate in the late 1980s as
the country's first private stock market. (hen/nur)