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New IDX chief vows to boost online trading and build trust
The recent annual shareholders' meeting of the Indonesia Stock Exchange elected Harvard graduate Ito Warsito as the new president director of the bourse, replacing Erry Firmansyah, who was in the post since 2002
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The recent annual shareholders' meeting of the Indonesia Stock Exchange elected Harvard graduate Ito Warsito as the new president director of the bourse, replacing Erry Firmansyah, who was in the post since 2002.
Ito recently talked with a group of journalists to share his vision on the future of the IDX. Below are excerpts from the interview:
Question: What is your plan for the IDX when you are elected?
Answer: Our team wants the IDX to be competitive, with world-class credibility, and our mission is to improve competitiveness by attracting more investors and companies to enter the capital market.
We also want to review all the regulations that are not in line with current market conditions. These regulations have been effective since 1996 after the promulgation of the 1996 Capital Market Law with no changes since then. All these rules will be included in our review.
We know that only a quarter of some 400 listed companies are actively traded in the bourse, what will you do to improve this?
The plan is we want to introduce a scheme called *liquidity provider', or more widely known as the market maker. However the stock market regulator Bapepam-LK thinks the term market maker is too sensitive, so we will go with *liquidity provider'.
Under the scheme, each securities company will have a role as the liquidity provider of certain shares, the brokers then will make an offer or bid for the shares in order to stimulate transactions.
We may begin with a pilot project involving between 35 and 50 non-active shares. The scheme will run based on commercial principles; we will not give any incentives for *participating* securities companies because this would not make it sustainable for the future. But we need to discuss the plan with the securities companies first to seek the best mechanism to implement the plan.
What will you do to minimize *the chance that* cases like Sarijaya or Antaboga may happen again in the future?
The cases of Sarijaya and Antaboga have put the credibility of the stock market authority at stake. Therefore, the team has set up a strategic plan to deal with that. We realize it is difficult to increase the number of investors when these cases have undermined the credibility of the industry, so we hope that during our term we can set up a protection fund or compensation funds for retail investors, whose money has been misused by securities houses.
However, we need to discuss where we can access such funds. We think that part of it can be levied on investors. Other parts can be covered by securities house and the rest will be our responsibility. But we still need to discuss it.
What will you do to increase the number of retail investor in the local capital market?
We are targeting to have 1 percent of the country's total population as investors in the next three years. Aside from making conducive regulations, we will also expand and upgrade the coverage of online trading to reach out to potential investors in remote areas. We realize that information technology has become the backbone of the industry in this archipelagic country. It is definitely a powerful tool to increase the number of investors. (Ito answered the question with Director for information and technology Adikin Basirun assisting).
How would you respond to rumors saying that you had strong support from the finance ministry and Bapepam-LK for your candidacy?
It is not true. My candidacy was based on a proper recruitment process. In February, certain securities companies approached me and offered me to join a ticket as a president director candidate in the June election. I declined their offer as I was undergoing another selection for the same candidacy, where I think there was a more complete procedure because I competed with other four candidates to get the nomination. However due to my initial refusal, it suddenly appeared in the news that I had a good relationship with Bape-pam-LK and the Finance Ministry. I have built good relationships with them but only in professional terms when I was still working for Bahana securities and Danareksa (the state-owned securities companies.)
