Oct 17, 2012

Indonesia - Indonesia Stock Exchange Works to Join Stock Trade Link

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A plan by the management of the Indonesia Stock Exchange to join a single integrated trading market in the coming years will hinge on the preparedness of its human resources and information technology, analysts in Jakarta said.

Reza Priyambada, head of research at Trust Securities in Jakarta, said that the exchange (IDX) has to improve its infrastructure system before participating in a link up with other exchanges in the Association of Southeast Asian Nations.

He cited the IT error nearly two months ago that crippled the bourse’s main trading server for almost an entire day, and that was handled poorly by the exchange.

“The recent IT glitch on the exchange was an indication that the bourse still needs to improve the infrastructure before it can join the Asean linkage,” Reza said.

Trading on the Indonesia Stock Exchange almost came to a stop on Aug. 27 because the IT error caused chaos.

The IDX had a technical error in its main server, allowing only a handful of traders to access the exchange’s trading server.

“If it can be implemented smoothly, we can surely see positive impact to the trading activities on IDX,” Reza noted.

He added that the management of the local bourse also can increase accessibility to information about Indonesia’s listed companies, thus attracting more investment.

Their comments come after Ito Warsito, president director of the IDX, said as quoted by Bloomberg that Indonesia will connect to the Asean trading link by 2015 at the latest.

“If it becomes policy [to join Asean linkage] then we still have enough time to prepare ourselves,” said Samsul Hidayat, a director at IDX, on Tuesday.

Samasul said that the bourses across the region would need to talk about adjusting their regulations and resolutions to disputes.

Bloomberg reported on Monday that Indonesia and Vietnam will join the Malaysian, Singaporean and Thai bourses in offering cross-border trades within three years as part of a plan to create a Southeast Asian trading platform aimed at attracting investors.
Hanoi Stock Exchange chief executive Tran Van Dung said that he expects Vietnam’s two exchanges to join within two years.

“Participating in the link will allow local investors to have direct access to other exchanges,” Charamporn Jotikasthira, president of the Stock Exchange of Thailand, said in an interview in Taipei. “This connection will bring long- term liquidity to the market.”

The trading platform between the Asean members is part of a push to bolster regional capital markets and lure more investors to the exchanges in which companies have a combined market value of about $2 trillion, according to a statement issued by Asean Exchanges.

Indonesia’s stock exchange is home to 447 listed companies with a combined market value of Rp 4,088 trillion ($427 billion).

Thailand’s link-up on Tuesday followed Singapore Exchange, and Bursa Malaysia, which connected to the link on Sept. 18.

Francezka Nangoy

Additional reporting from Bloomberg

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