Fund managers may have to report daily

Aditya Suharmoko ,  The Jakarta Post ,  Jakarta   |  Sat, 03/01/2008 12:38 PM  |  Business

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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