IDX limits firm's shares eligible for higher risk trading

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Fri, 05/01/2009 2:51 PM  |  Business

The Indonesia Stock Exchange (IDX) announced Thursday the list of which company's shares will be eligible in future for margin trading and short selling transactions.

Under criteria set out in the new IDX policy aimed at reducing market volatility, only 21 firm's shares are now eligible for margin trading transactions out of the present 30 firms; and only 18 firm's shares will be eligible for short selling trades.

Under the new policy, to start taking effect on May 1, firm's shares eligible for the two trading schemes should have a minimum daily trading value of Rp 5 billion (US$470,000) within three months.

IDX director for equity trading, research and business develop-ment M.S. Sembiring said that three firm's shares in the current margin trading list failed to meet the criteria.

"Those shares did not meet the requirement *for short selling transaction* of a minimum 20 percent of free float shares in the market," said Sembiring.

The three firm's shares belong to the country's second largest telcom operator PT Indosat, to nickel producer PT International Nickel Indonesia (Inco) and to the local subsidiary of the world's second biggest consumer goods company PT Unilever Indonesia.

Previously, IDX allowed margin trading transactions for shares with minimum daily transactions of Rp 5 billion with no time limits, while short selling schemes were banned since October last year.

Margin trading involves transactions where investors borrow money backed by collateralized shares from brokers to buy securities.

The broker may secure handsome proceeds from loan interest rates. But if and when the value of the securities falls, then the investors will make greater losses than any others.

Short selling is a way of trading where investors can sell shares they can borrow or use, but do not own, with a view to buyingthem back again at lower prices to make profits.

List of Eligible shares:

PT Astra Agro Lestari
PT Aneka Tambang
PT Astra International
PT Bank Central Asia
PT Bank Nasional Indonesia
PT Bank Rakyat Indonesia
PT Bank Danamon
PT Bank Mandiri
PT Bumi Resources
PT Bakrieland Development
PT Indofood
PT Medco Energi Internasional
PT Perusahaan Gas Nasional
PT Tambang Batubara Bukit Asam
PT Semen Gresik
PT Timah Tbk
PT Telekomunikasi Indonesia
PT United Tractors
PT Indosat Tbk
PT Int'l Nickel Indonesia
PT Unilever Indonesia

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