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The planned merger of the Jakarta Stock Exchange (JSX) and
Surabaya Stock Exchange (SSX) will not only improve trading efficiency,
but will also offer more investment options to both local and foreign
investors, a senior official from the Capital Market and Financial
Institutions Supervisory Agency (Bapepam-LK) says.
"In addition to an improvement in the bourse's operation, the merger
will give investors a wider range of investment alternatives," Arif
Baharudin, the head of the agency's securities transactions department,
said Wednesday in Jakarta.
With the merger, the stock exchange will provide a wider range of
investment options under a one-roof trading service, he said.
Speaking to reporters following the launch of a new list of
sharia-compliant stocks, Arif said that with the merger, product
development would become easier.
"A derivative product offered by the Surabaya bourse is, for example,
still based on price references to stocks traded on the Jakarta
exchange," he said. Following the merger, the bourse would be able to
create a derivative based on its own price reference. "Thus, it will be
more flexible," he explained.
After years of preparation, the JSX and SSX operators finally agreed
Tuesday to gradually merge the two bourses beginning at the end of
October.
Under the plan, the merged bourses will operate under a new name, the
Indonesian Stock Exchange, which will combine all of the two bourses'
operations and assets, giving it a total capitalization of Rp 1,850
trillion (about US$196 billion).
The two exchanges have until January or February to totally merge their
trading activities under one roof. The merger plan will not affect the
existing boards of directors and commissioners, as they will remain in
office until Oct. 30 next year, when new boards of directors and
commissioners will be elected.
"We are giving a transition period of two years to ensure that merger
process proceeds smoothly," JSX president Erry Firmansyah said.
With the merger, Erry said he hoped that the new Indonesian stock
exchange would be able to compete with other bourses in the region in
attracting investors.
He said that the merged bourse would need a better trading system and
more investment options in order to be able to compete with the
region's capital markets.
At present, the JSX focuses its activities on the trading of equity
stocks, and has a market capitalization of Rp 1,500 trillion, while the
SSX mainly handles bond trading, and has a capitalization of about Rp
530 trillion.
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