Ten brokerage firms leave JSX

Ten brokerage firms leave JSX

Rendi A. Witular, The Jakarta Post, Jakarta

The Jakarta Stock Exchange (JSX) said on Tuesday that ten
local brokerage houses had decided to quit the local bourse
because of their inability to meet the new working capital
requirements.

JSX president Erry Firmansyah said the bourse's new regulation
obliged brokerage houses to have a minimum of Rp 10 billion
(US$1.2 million) in working capital by December.

The previous ruling required brokerage firms to only have
a minimum of Rp 5 billion in working capital.

"There are 10 members (brokerage houses) of the JSX that have
decided to pull out because of the regulation. But for now I
cannot give the names of the companies," said Erry during a press
briefing.

He said the JSX would monitor other brokerage houses up until
the Dec. 1 deadline to make sure they complied with the new
regulation.

He explained that the JSX would limit the transaction volumes
of brokerage houses if they failed to meet the deadline. The
bourse would only allow the companies to conduct transactions
worth no more than five times their working capital.

The JSX would give another grace period up until Dec. 23 for
the companies to comply with the regulation or risk being banned
from trading.

Elsewhere, Erry said the JSX projected that by the end of this
year average daily transactions would reach Rp 500 billion with
the Jakarta Composite Index expected to stand at between the 600
and 650 levels.

Thus far, daily average transactions on the bourse stand at
around Rp 473 billion with the Index averaging around 630 points.

He said the JSX would try to support the recent surge in the
index by preventing mischievous practices by recalcitrant
speculators from undermining the shares, especially second
liners.

The JSX's supervision director, Sihol Siagian, said that the
JSX had found a number of cases where the prices of shares
belonging to the certain second line companies had been pushed up
significantly by speculators in order to attract other investors
to join in the buying.

He explained that this would mislead investors as the surges
in the shares did not reflect the true fundamentals of the
companies.

He said that after the shares jumped to a certain level, the
speculators would then unload their shares and leave those who
bought their shares later to bear the losses.

If there were such indications, the JSX would immediately
suspend the trading of the shares and warn investors through
brokerage houses on the possibility of "dirty" speculation, said
Sihol.

However, Sihol refused to name any companies that had or might
become the victim of such practices.