Update: IT Glitch Disrupts Indonesian Stock Trading

Ivan Dasa Saputra & Bloomberg

The Indonesian stock exchange delayed trading on Monday after almost a
third of its members failed to connect to the bourse’s system.

Trading resumed about 1:30 p.m. according to Samsul Hidayat, the bourse’s director of trading and membership, but was suspended again at 3:30 p.m., or half an hour before the market close.

The benchmark Jakarta Composite Index rose by just 0.01 percent, closing at 4,145.88. Only 664,000 shares were traded based on data from Bloomberg, a
miniscule amount compared to the average 4.4 billion shares traded daily on the IDX this year.

A problem was encountered in the Indonesian Stock Exchange’s (IDX) main trading site, according to
Ito Warsito, the president director of IDX.

“When we held a simulation this morning, it turned out that only 84
brokers were connected and therefore we decided to delay the opening of
trading for 30 minutes to investigate the connection
problem,” Ito told the Jakarta Globe on Monday Morning.

He said the system should have connected all 114 brokers registered at the bourse.

The bourse tried to move to the backup system known as the Disaster Recovery Center (DRC), a reserve transaction system
that was built as part of the Rp 30 billion revitalization program for
the bourse.

But Uriep
Budhi Prasetyo, a director, told Bloomberg that trading did not
resume by 10 a.m. as planned, adding that the exchange was investigating the
cause of the problem.

The IDX experienced an hour-long disruption in April 2009 when a cable used for sending transaction data malfunctioned after a buy order overran its capacity, the bourse said at the time. In October 2008, the bourse halted trading for three days following a 10 percent plunge in the key stock index.

“It creates a reputation problem,” Siswa Rizali, who helps manage about $367 million at PT Andalan Artha Advisindo Sekuritas, said by phone from Jakarta. “It happened before. The stock exchange has to convince people that they have the capability to provide smooth transactions.”

The disruption won’t deter foreign investors lured by the Indonesia’s economic growth, Samsung Asset Management Co.’s Alan Richardson said.

Overseas funds bought a net $935.2 million of Indonesian equities this year to Aug. 24, on course for three straight years of purchases, data compiled by Bloomberg show.

Foreign investors sold $21.3 million of shares on Aug. 24, snapping nine days of buying, the data showed.

“It’s a temporary glitch,” Richardson, a Singapore-based fund manager who helps oversee $82 billion, said by phone. “It won’t scare foreign investors away. Investors are attracted by 6 percent to 7 percent gross domestic product growth which is expected to sustain next year, and 20 percent corporate earnings growth.”

Bloomberg