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The Capital Market and Financial Institutions Supervisory
Agency (Bapepam-LK) has introduced drafts on two investment
regulations, including a demand for fund managers to submit reports
daily, up from once a month previously.
Bapepam-LK has asked fund managers to study the drafts and give their
responses on March 6 at the latest.
"It is crucial to improve our capital market. We will (be able to)
monitor fund managers in managing their portfolios," Bapepam-LK
chairman A. Fuad Rahmany told reporters in Jakarta on Friday.
If instituted, the two regulations would replace an older regulation on
prohibited actions for fund managers and another one on fund managers'
monthly reports.
Fuad said some fund managersaround" with their clients' money, such as
by engaging in margin trading or short selling.
He said with the growing capital market in the country, Bapepam-LK
needed to enhance its supervision to ensure transparency.
In 2007, the Indonesia Stock Exchange (IDX, or BEI) recorded a market
capitalization of about Rp 2.54 trillion (US$280.24 million),
increasing from about Rp 1.98 trillion the previous year.
The daily reports would be submitted in electronic format.
"It will be more practical and easier, and it will save time," Fuad
said.
The draft stipulates fund managers must separate their own portfolio
and their clients' portfolios in different logs and prohibits making
promises of profit to clients.
Moreover, fund managers must save their clients' funds in a custodian
bank, a financial institution responsible for safeguarding a firm's or
individual's financial assets.
It also orders fund managers to record all meetings with their clients
regarding clients' portfolios.
Fund managers talking to The Jakarta Post said Bapepam-LK must further
clarify its objectives in drafting the regulation.
They mostly complained of the obligation to submit daily reports,
saying Bape-pam-LK would not have adequate resources to scrutinize the
reports.
They further said most fund managers had been very transparent in their
activity and that the exist-ing regulation was sufficient to safeguard
the interests of clients.
The head of the Indonesian Investment Managers Representative
Association (AWMII), Putut E. Andanawarih, declined to comment on the
draft regulation. However, he said AWMII would review it and give
feedback to Bapepam-LK before the March 6 deadline.
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