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Tuesday, May 18, 2010

Underwriting value lowered down

Tuesday, 18/05/2010 00:00 WIB
Underwriting value lowered down

Irvin Avriano A.
Bisnis Indonesia

JAKARTA: The Capital Market and Finance Institution Supervisory Agency (Bapepam-LK) studies to cut down percentage of underwriting value which is categorized into the calculation of the adjusted net working capital (MKBD) as from the proposed 30 percent into 15-20 percent.

Securities company and transaction bureau chief of Bapepam-LK Nurhaida said the plan to cut down underwriting composition will be effectively done by each securities company with underwriting license.

The regulation will be issued following the issuance of draft revision of Law No.V.D.5. on the maintenance and report of MKBD. "The 15 percent cut is deemed quite more relaxing. In the near future, we will see input form the market players," he said in Jakarta yesterday

The plan here concerns with an earlier draft issued by the capital market authority last eyar. Bapepam plans to set the underwriting limit in the second draft which is put in the ranking of liabilities.

The liabilities rank is a number of contingent liabilities and off balance sheet liabilities which according to certain calculation will be added to the liabilities as the risk factor of MKBD calculation.

Formerly, liabilities calculation does not affect the MKBD calculation. in the final draft, Bapepam recommended the 30 percent of the underwriting commitment when it has gained effective statement from the capital market authority.

For underwriting with portion process, 50 percent of the notes issuance which are not booked yet should be added to the liabilities rank. With the already accomplished portioning contract, 100 percent of the remaining notes with unsold portion should be included in the liabilities ranking.

The underwriter which acts as the standby buyer, liabilities rank is derived from the 50 percent of the total haircut multiplied by the offering price of some stocks portion.

As to him, the calculation of liability ranking is badly required to define the securities financing condition and thus their risks are measurable.

"We want all risks are measurable in the MKBD. If it is low, it ignores risks, but if it is high, it burdens the securities. The plan comes from the simulation we have made," he said.

It is possible to meet the market player that call for the portion increase so the capital market authority still expects inputs from market players. (Bisnis/iaa)

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