The new management of the Indonesia Stock Exchange (IDX) has reignited plans to revamp its ownership structure, which will enable it to go public and expand the capital market industry.
"We hope the plan will unfold throughout the next three years of my tenure," said Ito Warsito, who was appointed IDX president director in late June.
Under the plan, known also as a demutualization program, IDX will sell a stake of its ownership to the public through public offerings.
Ito however said such a plan would still take time as it requires a change in IDX's ownership structure from its current standing as a member-owned institution to a profit-oriented, public shareholder institution.
Currently, IDX is owned by 119 securities houses, each with an equal voting right.
"Our task now is to prepare all the securities companies, as well as the internal structure within IDX itself, for the *demutualization* plan," Ito said. Also required is a revision to the existing regulations.
Under the 1995 Capital Market Law, the IDX must be owned by its members, in this case the securities companies.
Ito said the demutualization plan would help equip the IDX with the financial strength to embark on a number of programs, designed in part to boost the performance of the country's capital market industry.
Those programs have been earmarked by the IDX's new management and include the upgrading of information and technology facilities, a significant investment.
The plan follows moves by other stock exchanges around the world which have long acted not only as a stock market regulator but also a publicly listed company, allowing them to react quickly to the ever-developing needs of the market.
In response to this plan, Airlangga Hartarto, chairman of the Indonesian publicly listed companies association (AEI), said the grouping had expressed its support for the demutualization plan because it would open opportunities for the country's top corporations to take part in the management of the bourse.
"So far, the bourse has mostly accommodated the interests of securities companies while sometimes neglecting publicly listed companies," he said.
Fuad A. Rahmany, head of the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK), said that while he welcomed the plan, a greater evaluation of the cost and benefits of the program needed to be undertaken.
"We realize that the plan will attract pros and cons, therefore we need to discuss it further together," he said.
There has been concern also that the implementation of a new ownership scheme could lead to foreign investors buying large stakes in the IDX.
Ito said by imposing a cap on the number of shares able to be purchased by the public, including those overseas expressing interest, the potential for this outcome would be lessened.
