Surabaya bourse and Nasdaq sign MOU

JAKARTA (JP): Nasdaq International Market Initiative (NIMI) of the United States agreed here yesterday to help the Surabaya Stock Exchange improve its trading.

Under a memorandum of understanding signed by Nasdaq senior associate Michael J. Kulczak and the exchange's president Isakayoga CH, NIMI will provide technical assistance to improve the exchange's trading system.

Isakayoga said NIMI -- a subsidiary of Nasdaq, the New York- based over-the-counter market -- would introduce a market making system at the exchange.

"We hope the new system will be able to improve the liquidity of the market," he said after signing the memorandum.

The Surabaya exchange was established in 1989 as the first privately-owned stock market in the country, and the only stock market outside Jakarta.

The exchange lacks liquidity because investors prefer to trade shares through the Jakarta Stock Exchange. Most shares listed on the Surabaya exchange are also traded on the Jakarta exchange.

The Surabaya exchange took over the country's Bursa Paralel Indonesia, the country's only over-the-counter market, last year to improve its market base. But liquidity remains a problem even though the exchange uses a combination of auction and market making systems.

Kulczak said the memorandum would help the Surabaya exchange move from being a small-dealer market to a national-dealer market.

NIMI's technical assistance will include trading strategies, training programs and consistent monitoring mechanisms for market makers on a day-to-day basis, Kulczac said.

NIMI will also be able to help Indonesian listed companies seek a dual listing on Nasdaq and other U.S. stock markets, he said.

NIMI will provide information on the listing requirements that Indonesian companies must meet to float their shares on Nasdaq or the New York Stock Exchange.

On accounting and disclosure procedures, Kulczac said, Indonesian companies could seek assistance through Nasdaq International Limited, like Tri Polyta and Inti Indorayon which are already listed on Nasdaq.

Indonesian companies will be able to list on the Surabaya exchange before listing in the United States, he said.

Isakayoga said NIMI was expected to provide technical assistance to encourage small and medium companies to float their shares on the Surabaya exchange.

Nasdaq, established 1971, has grown from an over-the-counter market to the most active screen-based trading market in the world, with 800 million shares traded daily, he said.

Kulczak said his company would work with the exchange to assess business plans and existing business technology systems next January. (01)