What is the Capital Market?
The Capital Market is a vehicle to unite parties who need
long term financing and parties who have the money.
Definition of the Capital Market due to the Capital Market
Law
Capital Market is an activity which is related to :
Going public and securities trading
Listed companies which is related to their issued securities
Institution and profession which is related to securities
Capital Market Law No. 8, 1995
Function of the Capital Market
Long term financing
Alternative investment
Restructuring tool of corporate capital
Divesting tool
What is Going Public ?
Going Public is a securities offering executed by issuers in
order to sell their securities to the public.
The Process of Going Public
Primary Market
Securities Offering by Underwriter and Selling Agent
Allotment
Securities Delivery
2. Secondary Market
Issuers list their securities at the bourse
Securities trading at the bourse
Primary Market vs. Secondary Market
Primary Market
Unchanged stock price
No commission
Just for stock buying
Order through the selling agent
Limited period
2. Secondary Market
Fluctuate stock price depend on the market
There is a commission
For stock buying and selling
Order through the JSX members
No time limit
Market Types at the Capital Market
Primary Market or Initial Public Offering (IPO)
Secondary Market
The Capital Market Supervisory Agency
The Role : doing restoration and control
The Bourse
Party which is executing and facilitating systems and
infrastructure for securities trading. Similar with the other market which
facilitate the meeting of a buyer and a seller to do securities transaction.
The Roles of the Bourse
Providing infrastructure for securities trading
Providing regulations related to listing, trading and membership
Making the effort for instruments liquidity
Preventing mal practices, i.e. : collusion, insider trading, etc.
Disseminating the exchange information (transparency)
Creating new instruments and services
What is a Public Company ?
A Public Company is a company which meet the requirements :
Shares were owned by more than 300 shareholders, and
The Paid up Capital is Rp 3,000,000,000,- (three billion rupiahs) or more.
Who is the Issuer ?
A company which is offering their securities to the public through the
Initial Public Offering
Such Securities that had been sold to the investors at the Primary Market
can be re-sold by the investors through the stock exchange where they listed
(Secondary Market).
The Clearing and Guarantee Institution (LKP)
An institution which executed clearing services and guarantee for the
settlement of exchange transaction
Executed by The Indonesian Clearing and Guarantee Corporation (PT KPEI)
The Custodian and Settlement Institution (LPP)
An institution which executed the activity of central custody for custodian
bank, exchange members and other party.
Executed by the Indonesian Central Securities Depository (PT KSEI)
SUPPORTING INSTITUTIONS IN THE CAPITAL MARKET
Underwriter
A company which make a contract with an issuer to do the
Initial Public Offering for the issuer’s interest with or without the obligation
for buying the un-sold stocks.
Securities Exchange Member
A company which is doing securities selling or buying for themselves or the
other party (their clients).
Also called as a broker-dealer company
Custodian
A company which is giving services :
The custody for securities and other property which is related to
securities, other services, including receiving dividend, interest and other
rights.
Completing securities transaction
Representing account holder who are their clients.
Securities Administration Bureau
A company which is due to their contract with the issuer,
doing registration of securities holder and delivering right which is related to
the securities.
Trust Agents
A party which is representing the interest of bond holders.
Credit Rating Indonesia (PEFINDO)
An institution which rank all bonds to give the opinion about
the risks of the bonds independently, objectively and fairly.
Investment Management
A company which manage securities portfolio for their
clients.
SUPPORTING PROFESSIONS IN THE CAPITAL MARKET
Accountant, Consultant of Law, Appraiser, Notary, and other
profession determined by the government rule. To be active in the capital
market, they have to be listed at the Capital Market Supervisory Agency (BAPEPAM).
The requirements are stipulated at the Bapepam’s regulation.
Public Accountant
The Roles :
Doing an audit on the financial report and giving their opinion
Checking the bookkeeping, has it already met with the Indonesian Accounting
Principles and the Bapepam’s rules.
Giving the direction for doing good-bookkeeping (if needed).
Consultant of Law
Doing Legal Audit
Giving Legal Opinion to the issuer and public company.
Legal Audit
Founding certificate included its changes
Financial Capital
License
Asset ownership on behalf of the company
Contract with the third party, either in nor out of the country
Civil or criminal case related to the company or personal of the board of
directors.
UMR
AMDAL
Notary
The roles :
Making an official report of the General Shareholder’s Meeting.
Making changes of the Article of Association
Preparing agreements underlying the public offering
Appraiser
A party which publish and sign appraisal report of fixed
asset owned by the issuing company which is arranged base on the investigation
according to the appraiser’s expertise.
resource: idx.co.id