Team prepares markets merger

Team prepares markets merger

JAKARTA (JP): Executives of the Surabaya Stock Exchange (SSE) and Bursa Parallel Indonesia (BPI), the country's only over-the- counter capital market, have agreed to form a joint team to prepare a merger of the two exchanges.

SSE's president, Basjiruddin A. Sarida, said that the team would prepare the legal foundation for the operation of the merged exchange, which will blend auction and market maker-driven trading into a single trading system.

"The joint team will work hand in hand with the teams already established by the two exchanges," Basjiruddin said over the weekend.

The task of the joint team will include the formulation of the regulations which will govern capital structure, transactions and listings, as well as the trading system for the unified market.

BPI was established in 1990 by the Association of Money and Securities Traders as the first over-the-counter market in the country.

Its operation, however, has not been overly successful, with most share issuers still preferring to list their stocks on the Jakarta or Surabaya exchanges.

The SSE, established in 1989 as Indonesia's first privately- owned capital market, is more active than BPI. But the exchange, located in the capital of East Java province, has so far failed to carry out its mission to promote public listing as a major capital source for companies in the province.

The Surabaya market's early operations benefited considerably from the government's double-listing policy, which required share issuers to cross-list their shares on both the Jakarta and Surabaya stock exchanges.

With the abolition of the double-listing policy following the privatization of the Jakarta stock market in 1992, the Surabaya exchange faltered until the government came to its assistance by lobbying share issuers to retain their cross-listings.(hen)