inance Minister Sri Mulyani Indrawati insists that a new regulation affecting market research by banks and securities firms is necessary to maintain investors' confidence about a stable outlook of Indonesia's economy.
The Finance Ministry's regulation tightens requirements for banks involved with the primary dealing of Indonesian sovereign bonds. Banks are also expected to avoid conflicts of interests and abide by the country’s interests.
Sri said the rule aimed to ensure a good reputation and track record for both existing and potential banks and securities firms engaging in such a primary dealership system.
"We are not seeking partners who please us, but rather those who have good governance, so they can respect and support what the government needs and take Indonesia's interests into consideration," the finance minister said on Wednesday during a meeting with the House of Representative's Commission XI overseeing banking and finance.
(Read also: Govt feels deceived by JPMorgan)
Sri stressed that biased and baseless research could trigger unfavorable psychological perceptions among investors amid turbulence in the global financial market, thus increasing their chance of panicking and rushing off to withdraw their funds from certain countries.
The new rule was issued following the Finance Ministry’s move to revoke a mandate of JPMorgan Chase & Co. as a primary dealer and underwriter for its sovereign bonds. The bank earlier issued a report that downgraded Indonesia’s equities from “overweight” to “underweight” in November 2016 following Donald Trump’s victory in the United States presidential election. (lnd)
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