T

he Indonesia Stock Exchange (IDX) is still reluctant to join the ASEAN Trading Link, a cross-border trading gateway among ASEAN members, because of the lack of a dispute-settlement system, a senior official with the capital market watchdog has said.

The Financial Services Authority'€™s (OJK) commissioner for capital market supervision Nurhaida said that the country'€™s bourse would only join the trading link '€” which currently consists of Singapore, Thailand and Malaysia '€” only if several important issues were first addressed.

The issues, Nurhaida said, included how the system would handle disputes, as well as how to deal with the wide gaps between stock exchanges in the region.

'€œWe are ready to join the trading link; our market is ready to be integrated. But we are still assessing whether or not this system is favorable for our stock exchange,'€ she explained.

Nurhaida further said that stock exchanges across ASEAN differed widely not only in terms of market size but also in the trading platforms they used. Some ASEAN members did not even have stock markets, while other bourses had very few companies listed, she added.

Cambodia'€™s stock exchange, for instance, has only two new listed firms despite having operated for three years, while Myanmar is still working on setting up its capital market and Brunei Darussalam is trying to initiate one.

'€œThe trading link has no mandatory deadline. It depends on the preparedness of each country'€™s stock market. We'€™re in no hurry to join,'€ she said.

ASEAN Trading Link was launched in September 2012 as a way for securities brokers to offer investors easier cross-border trade between ASEAN member nations.

An integrated capital market is an important part of ASEAN'€™s plan to establish the ASEAN economic community (AEC), which is to be rolled out by the end of this year. So far, however, only three countries '€” whose stock markets are deemed the most mature in the region '€” have joined the initiative.

CIMB group chairman Dato'€™ Sri Nazir Razak was recently quoted by Malaysia'€™s The Star as saying that Indonesia would be a vital component in the AEC.

'€œThe world acknowledges the importance of Indonesia by its inclusion in G20. Every ASEAN initiative must include Indonesia, or at least have a timeline for Indonesia'€™s inclusion. And therein lies one of my major concerns for the AEC,'€ he said.

The banker added that Indonesia'€™s reluctance to join the ASEAN Trading Link was telling.

'€œIt does provide an alternative means for investors to trade across exchanges. But this is already available through regional brokers and inter-broker transactions. There is a need to understand Indonesia'€™s reluctance, what it means on the broader level in terms of its real commitment to AEC and what can be done about it,'€ argued Nazir.

One of the Indonesia'€™s main concerns, Nurhaida previously said, was the absence of regulations on foreign firms making initial public offerings in the IDX.

The OJK and IDX have been working on preparing the latter to compete with its regional peers ahead of the AEC, including introducing regulations helping local firms to go public, setting up good corporate governance blueprints and rolling out an extensible business reporting language-based financial reporting system.