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Monday, 05 April 10
RI TO SET REFERENCE FOR COMMODITIES - THE JAKARTA POST


The Jakarta Post reported that, Indonesia is set to help establish global reference prices for mining and agricultural commodities, with the establishment of a privately owned Indonesia Commodity and Derivatives Exchange (ICDX).

The new exchange is expected to help improve the country’s underdeveloped futures market and make the country the fifth largest commodity futures exchange in the world, says Commodity Futures Trading Supervisory Board (Bappebti) head Deddy Saleh.

“We have permitted the establishment of a new exchange … because we’ve seen in the last 10 years that there have been no satisfactory results since the BBJ [Jakarta Futures Exchange] was established [in 2000],” he told reporters during a conference after the official launch of the ICDX.

He said the BBJ should have served as a price reference and a place for hedging but it had failed due to “the absence of competitors and slow management”.

According to Deddy, 98 percent of transactions occurring in the BBJ were alternative trading, such as foreign exchange and indexing, which were yet to be regulated.

“This [ICDX] is privately owned. A private company won’t play around with their capital,” said Deddy.

ICDX president director Megain Widjaja said trading in the ICDX would be transparent as transaction data could be accessed online and later on TV.

“We have cooperated with Bloomberg. But transactions are still closed [for time being] … We’ll later cooperate with Reuters so [transactions] can be accessed online and can be seen on TV and the internet.”

Trade Minister Mari Elka Pangestu, who was also present, said: “The importance of a commodity futures exchange is that transactions will be more liquid, more transparent and [we can be] a price reference,” she said.

She said farmers would have more bargaining power on prices when negotiating with their buyers, and thus, cartel practices — control over prices of a commodity by certain parties — could be avoided.

She also said foreign brokers and market traders were now allowed to trade in the exchange to make the country’s commodity futures exchange perform better.

The ICDX is now trading gold and crude palm oil (CPO) futures contracts.

The ICDX has listed 15 members, seven of whom are CPO producers. The members are PT Wilmar  Nabati Indonesia, publicly listed PT Sinar Mas Agro Resources, publicly listed PT Sampoerna Agro,  PT Duta Palma Nusantara, publicly listed PT BW Plantation, PT Palm Mas Asri, PT Danpac Futures, PT Valbury Asia Futures, PT Sinarmas Futures, PT Universal Futures, PT Aperdi and PT Monex Investindo.

The senior economist of Standard Chartered Bank Fauzi Ichsan said with Indonesia being the world’s largest CPO producer, “it is time to have a commodity futures exchange”. But, he said, big investors would likely trade in Singapore as the latter’s market was more liquid.  “We hope they’re not only listed [in the ICDX] but that they will also trade in Indonesia,” he told  The Jakarta Post.
Source: The Jakarta Post



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