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Thursday, July 1, 2010

BEI Delays Realization of Stock Option Contract Again

Monday, 28/06/2010 00:00 WIB

BEI Delays Realization of Stock Option Contract Again

Irvin Avriano A.
Bisnis Indonesia

JAKARTA: Indonesia Stock Exchange (BEI) promises to realize stock option contract (KOS) next year since it needs to synergize its trading in a new bourse machine system, JATS NEXT-G.

"Therefore, the stock option contract seems to only be realized at the yearend and be practiced next year," said Director of Trading and Bourse Member Arrangement at BEI Wan Wei Yiong to Bisnis in Jakarta last weekend.

With the decision, the derivative securities transaction would be delayed from the previous target of 2008. The launch of the derivative securities transaction has been delayed several times, even since the terms of service of the old board of directors.

Derivative securities are derivative products with major securities commonly called underlying assets, which can take a form of stock or debt securities. The transactions are contracts or agreements whose values or returns depend on the performances of the underlying assets.

He explained another derivative securities trading, namely the LQ-45 future index would also fnd its system merged.

Wei Yiong denied rumor saying the delayed realization was attributable to lack of interests from securities companies in becoming the market makers.

Market maker or liquidity provider is regular trading facilitator and liquidity provider that puts sale and purchasing price routinely, creating certainty for the investment instrument transactions.

BEI previously run a simulation for KOS and future index trading on its official website as part of socialization measure. The simulation attracts 1,500 visitors within three trial months since it as launched earlier last year.

Last year, BEI delayed the derivative transaction schedule from April due to the lack of preparation from the derivative trading system of bourse members.

Of 34 bourse members interested in becoming derivative market players, only five members, such as PT Universal Broker, PT Pacific 2000, and PT Sucorinvest Central Gani, have been ready with the systems. Of the 24 bourse members, only 17 express their readiness to become market makers.

The delay is made since bourse members still focus on the new stock trading system, JATS NEXT-G. Lack of capital is another factor.

In making investments, investors can take advantage of KOS as a hedging instrument when stock prices drop. (Bisnis/iaa)

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