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)