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Saturday, December 5, 2009

'Bapepam-LK is the right to monitor money market'


as published in Bisnis Indonesia daily newspaper
Saturday, 05/12/2009 00:00 WIB
'Bapepam-LK is the right to monitor money market'

JAKARTA: Bank Indonesia (BI) considered the Capital Market and Finance Institution Supervisory Agency (Bapepam LK) is more proper to perform in regulation and supervision to the existence of money market as the complementary to the finance system.

Ad interim BI Governor Darmin Nasution said the issue on money market formation should be revived as the complementary to finance system. In other countries, money market serves as investment and financing alternative.

"Money market has wide scopes including the SBI and credit that could become money market. So, it is only money market that has competition each other. So, we think it is necessary to articulate the issue rather than left idle," he said yesterday.

Substantially the regulator and supervisor of money market is closer than Bapepam despite the fact that the Law only supervises the distribution of bonds above one year tenure.

"That is closer to the authorities of Bapepam despite the fact that Law on Bapepam has already stipulated the notes of more than one year. But it leads Bapepam not to consider it as its responsibility," he said.

BI could hardly do supervision noting that the player in the money market is the securities company. It violates Law No. 23/1999 on BI.

Chief of Bapepam-LK Ahmad Fuad Rahmany was not available for comment on the preparedness of the capital market authority in money market supervision.

The issue on money market formation was addressed by Darmin Nasution this week. The absence of money market has made Indonesia finance system ineffective yet and thus resulted in inefficient financing due to the absence of bank competitor in offering short term financing alternative.

Ideally, a country finance system consists of three financing sources, capital market, banking, and money market. Bank has no competitor and thus the offered lending rate could hardly be cut off. Capital market is not deemed the competitor as it focuses more on long term financing.

Money market is a group of market in which there is trading of short term credit instrument with high quality. The function of money market serves as the alternative of finance institution non finance firm to meet the short term or extra fund placement.

Economist of PT Bank Danamon Indonesia Tbk Helmi Arman agreed with Daramin.

Now Bapepam has higher function to supervise corporation and corporate issuance rather than Bi function focusing on mere bank.

"Usually CP [commercial paper]issued by the company is for short term working capital so it is necessary for corporate to have quick cash," he said yesterday. (Bisnis/hta/21)

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