Floor no more

The Finance Minister who will close the trading activity by the end of the year will undergo a new experience. As is known, it has been an annual traditions, trading activity at the domestic capital market was opened by the President at the beginning of each year and then closed by Finance Minister at the end of the year.

President Susilo Bambang Yudhoyono pressing the button in the IDX trading floor to resume trading in January 4, 2010. President was accompanied by (right to left) former Finance Minister Sri Mulyani Indrawati, Economic Coordinating Minister Hatta Rajasa, and State Secretary Sudi Silalahi. (photo: courtesy of IDX).

They usually being told to pressed a button in the Indonesia Exchange’s trading floor which followed by the sound of sirens, indicating the trade has been opened or closed each year. With the exchange authority plan to abolish and restore the trading floor starting from October this year until June 2011, the annual tradition definitely will be change, at least it will not happen again in the old trading floor.

The plan to abolish the exchange trading floor has been around for a long time, especially when the remote trading system is gradually implemented by all securities firms since 2002. The trading system enables securities house to process customer transaction order directly from the back office. This then reduces the role of securities brokers who placed in the trading floor, especially after the use of online trading become more popular and change the way customer having their stock trading.

A broker who declined to be named said it was the responsibility of the authority to make this breakthrough. “It’s a long discourse that has not been realized. So it’s very good if in the end it will be realized. But on the other hand, the management of securities would have to think about the future life of the brokers who used to work in the trading floor. How to improve their competence etc,” he said.

Supandi, Finance & Human Resources Director of IDX, who was appointed as coordinator of the restoration of trading floor, argue the place were no longer efficient. With the high renting building cost and the lesser brokers in the floor, the authority intended to restore it so it would be more efficient. However, Supandi who experienced as deputy project manager for the implementation of remote trading and also vice executive of trade system reform project refused to specify about the development plans.

So is the President Director of IDX Ito Warsito. “I will be giving special presentation for media journalist to explain about the plan, but not now. I’m afraid too many comments would lead into confusion. We are still in the process finalizing the restoration plan,” he said. Although refusing to specify, Ito ever mentioned to some journalist that the restoration would cost around Rp20 billion to Rp30 billion. Half have been approved to be allocated into the budgets of 2010 and the other half in the next year’s budget. The program will include turning the exchange trading floor in the ground floor into function hall and museum, renewing and enlarging the capital market reference center and exchange gallery in the first floor to become more comfortable for customer.

“We will create a mini-trading floor. We will make it into museum, because we don’t want the icon is missing. Later, we can utilize the trading simulation area for the ceremonial that had been held on the trading floor, for example, every end and the beginning of the year,” Supandi explained to journalists. He admitted IDX couldn’t afford to accommodate multiple trading systems as done in Wall Street. Moreover, there are countries like Malaysia, Singapore, and Japan that have been eliminating such exchange trading floor.

Although the plan has not being clear yet, one thing for sure the domestic capital market continues to keep up with the global change and development.

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