The Indonesia Security Exchange [BEI] would adopt a policy to change lot size of shares as per January 6, 2014. The number of shares per lot would be reduces from 500 shares to 100 shares per lot.
The change of lot size was aimed at reducing ratio between demand and transaction. The change of lot size could also increase stock of shares for transaction because odd lots which contained less than 500 shares which were smaller also made price conversion easier and increase liquidity.
On the other hand, the new lot size system could make price of lot more affordable to investors, especially retail investors. Investors who were in no possession of big fund could begin to invest and had the chance to buy fundamentally good shares which were quite pricy. Hence this new policy was synchronous with BEI’s effort to strengthen local investors.
Ever since the new lot size system was rolling there had been confusion in terms of effective date. Previously the Management of BEI had stated it would be effective as per December 1, 2013 and yet it was delayed again, based on reasoning that many tings had to be prepared and there was no agreement with BEI members.
As told by the President of PT BEI Ito Warsito, there were still 6 AB members who stated they were not ready comply with the change of lot size system and price fractioning. “There are around 6 AB members who are not technically ready to accept the new lot size system” Ito told the press on Monday [25/11].
Nevertheless Ito said it would not discourage BEI to implement the policy on January 6, 2014 next. To him it was no big problem, just a matter of hardware and software adjustment. Member of AB and Vendor Data must adjust their system at the stockmarket. “As planned, we too are to do another testing, probably to more times. We have decided that by January 6, 2014 all AB members and vendors are ready.” Ito said.
Meanwhile in the change of lot size system the fraction categories were reduced from five to three categories. The five price fractions so far were : shares categories with price below Rp200 the price fractions was Rp. 1.- the shares with price ranging from Rp200 to < Rp500 the price fraction was Rp5. Furthermore the shares with price ranging from 500 to < Rp 2,000 the price fraction was Rp10 and shares priced between Rp2,000 to > Rp5,000 the price fraction was Rp25.
Meanwhile shares with same price or above Rp5,000 the price fraction was Rp50. Meanwhile three new fraction were: shares priced less than Rp500 the price fraction was Rp1 and shares priced Rp5000 up to
The three price fractions were expected to create smoother movement of price share whereby to minimize negative impact to investors. The change in fraction system was also expected to enhance liquidity. “The new system is expected to enhance liquidity of shares” Ito Warsito remarked.
Samsul Hidayat, the Director of Trading and member of BEI said the most probably the policy would be executed on January 6 2014 next. As planned, the new system would be effective by December 1 this year. “Many things have to be prepared, like trading system etc. The issue is moreb of preparation” Hidayat said.
The application of new regulation on price fractioning and number of lots would be executed simultaneously. BEI, AB and Vendor Data would still be running data stimulation in regard to the new system.
So far all related parties stated that there was not notable hindrance in the data simulation. Meaning the policy was ready to be realized on January 6, 2014. “Today BEI, AB, and Vendor were only educating, publicizing and illuminating the customers in implementing the new policy” Samsul said.
Pro and Contra
Some the BEI members had been preparing the changed lot size system to be effective next year. Previously the plan was set forth by BEI authorities. The change would need technical preparation, particularly the on line trading system of members in line with the increasing frequency of transaction.
Hari Mantoro, President Director of HSBC Securities Indonesia admitted that technically he was ready to run the new policy. “Every Saturday there was test and trial, thew latest was last month”.
The test and trial had been exercised since 2011 last. It was simple: in the test and trial process: all systems related to lot size, speed order, upgrade operating system to hardware in the AB system must be adjusted to the Jakarta Automated Trading System [JATS] in BEI. Unfortunately hari was reluctant to disclose the investment value in the process.
“Perhaps the big investment is in BEI. We are only running what’s undone” Hari said.
Meanwhile some investors rejected BEI’ price to change the parameter of lot size and trick prize. Chairman of the Indonesia Security Community [MMSI] Sanusi said that in this regard he had exercised pooling with the help of ANGGUN TRADER BLOG. SPT, COM. The number of respondent in the pooling by internet was 1,550 investors. All in all in the pooling 91% had rejected change.
MISSI also rated that BEI’s way to change price fractioning at BEI with that in Singapore and Malaysia was not relevant because the capital structure in Indonesia was entirely different. The stockmarket in Singapore and Malaysia constituted 30% of population, while Indonesia only 0.1%.
“Also many investors in Singapore and Malaysia are long holders, while most share holders in Indonesia are day trade [buy in the morning sell in the evening]” Sanusi said in his written statement.
Sanusi estimated retail investors doing daily trading at the stockmarket constituted 40% of total daily transaction. If change were executed, investors who in their daily activities made transactions which in the end would lessen transactions. MISSI regretted that BEI had notbeen doing enough publicizing.
“We are never involved in discussions or hearing sessions related to the plan” Sanusi said.
Business News - November 29, 2013