Raise the White Flag! These 5 Foreign Brokers Leave Indonesia

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One more foreign stockbroker has left the Indonesian stock exchange. This time, broker PT Citigroup Sekuritas Indonesia (CSI), part of Citibank Indonesia, has finally officially stopped its 11-year business.

The termination of Citigroup Sekuritas’ business occurred in line with the sale of Citi’s consumer banking business in Indonesia.

Apart from Indonesia, Citigroup also decided to leave the consumer banking business in a dozen other countries, such as South Korea.

Previously reported by CNBC Indonesia, Wednesday (11/10/2021), the Indonesia Stock Exchange (IDX) officially revoked the Exchange Member Approval Letter (SPAB) of PT Citigroup Sekuritas Indonesia.

With the revocation of the SPAB, Citigroup Sekuritas Indonesia is no longer running the securities trading business in the country.

This is stated in an announcement numbered Peng-00045/BEI.ANG/11-2021 on November 10, 2021, which was delivered by the Director of Transaction Supervision and Compliance of the IDX, Kristian Manullang, and the Director of Trading and Member of the IDX, Laksono Widodo.

“It is hereby announced that as of November 10, 2021, the Board of Directors of the Indonesia Stock Exchange (IDX) has revoked the Exchange Member Approval Letter (SPAB) of PT Citigroup Sekuritas Indonesia,” the announcement said, Wednesday (10/11/2021).

This securities company with broker code CG was previously registered as an Exchange Member on July 7, 2010, with number 250.

IDX said PT Citigroup Sekuritas submitted a request to stop trading securities (voluntary suspension).

Based on IDX data, Citigroup Sekuritas is a securities company whose shares are 85% owned by Citibank Overseas Investment Corp USA, and 15% owned by Gunawan Geniushardja.

The company has not carried out securities transactions since October 2021. Meanwhile, the company’s adjusted net working capital (MKBD) in November 2021 reached Rp 293.36 billion.

Before the foreign brokers under the Citigroup United States (US) umbrella, since 2019 there have been four foreign brokers who have left and reduced their business activities in Indonesia.

The four brokers are PT Morgan Stanley Sekuritas Indonesia (from the United States/US), PT Merrill Lynch Sekuritas Indonesia (from the US), PT Deutsche Sekuritas Indonesia (from Germany), and PT Nomura Sekuritas Indonesia (from Japan). This foreign broker left Indonesia.

The following is a brief description of the other four stock brokers.

Morgan Stanley Sekuritas Indonesia

Morgan Stanley has officially announced to stop the activities of securities trading intermediaries (PPE) or brokerage (stockbrokers) in Indonesia.

In a statement delivered by MS management, this company will continue to facilitate securities trading in Indonesia for its clients, in cooperation with local brokers.

“Morgan Stanley has decided to stop brokerage activities in Indonesia. We will continue to provide access to the Indonesian equity market to our global clients through collaboration with eligible local brokerage partners,” the statement read to CNBC Indonesia, Thursday (27//5/2021).

“Morgan Stanley research will also be provided from Singapore. PT Morgan Stanley Sekuritas Indonesia will continue to serve our investment bank clients in Indonesia.”

The Indonesia Stock Exchange (IDX) has also revoked the Exchange Member Approval Letter (SPAB) owned by PT Morgan Stanley Sekuritas Indonesia or formerly known as PT Morgan Stanley Asia Indonesia as of June 30, 2021.

Morgan Stanley Indonesia’s SPAB numbered SPAB-250/JATS/BELANG/04-2012, dated 23 April 2012, and registration number 253. Morgan Stanley Indonesia has been operating as a stockbroker with the stock exchange member code, MS.

IDX said the departure of foreign brokers from Indonesia, as did Morgan Stanley, was due to the lower weighting of shares in ASEAN countries, including Indonesia in the weighting of the MSCI Index.

Director of Trading and Regulation of IDX Members, Laksono Widodo, said that the weighting of shares in this region in MSCI began to be pushed by Chinese stocks, which are also still categorized as developing countries in the index.

“Why did Morgan Stanley withdraw, it is better to ask them directly. But maybe with the decreasing weightings of ASEAN (including Indonesia) at MSCI (the pressure from China, which is still considered an emerging country),” said Laksono.

Merrill Lynch Sekuritas Indonesia

Merrill Lynch officially closed the business of brokerage or brokerage activities in Indonesia in 2019.

According to CNBC Indonesia’s records, as of July 11, 2019, the company that holds a securities brokerage license is no longer conducting stock trading activities.

MLSI is a company affiliated with world-class financial company BofA Securities or previously known as Bank of America Merrill Lynch.

Previously, Merrill Lynch was one of the major investment banks on the Wall Street exchange, United States (US).

However, the crisis that occurred in the US in 2008 made Merrill Lynch waver and had to accept the fact that it was acquired by the Bank of America (BoA) on January 1, 2009.

After being acquired, in 2011 Bank of America Merrill Lynch integrated its corporate and investment banking divisions.

Then in February 2019, Bank of America Merrill Lynch announced a rebranding of their investment banking division to BofA Securities.

In the financial statements of the broker with the code ML, it is stated that since January 1, 2019, the parent company has been acquired by Bank of America Corporation. MLSI continues its business as a subsidiary of Bank of America.

In Indonesia, MLSI was established in 1994 and received approval as a securities underwriter and securities broker from the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK), now the Financial Services Authority (OJK), on January 8, 1996.

Deutsche Sekuritas Indonesia

The Indonesia Stock Exchange (IDX) has officially revoked the Exchange Member Approval Letter (SPAB) from PT Deutsche Sekuritas Indonesia which has been in effect since April 17, 2020.

Deutsche Sekuritas obtained SPAB numbered 236/JATS/BEJ.ANG/12-2024, dated December 9, 2004 with trading code DB and registration number 239.

In July 2019, Deutsche submitted a resignation plan as one of the Exchange Members (AB). This resignation is in line with the massive restructuring steps carried out by its parent company Deutsche Bank Group.

Upon completion of this process, Deutsche’s AB seats are returned to the exchange and receive a refund at their nominal price.

The AB seats can be sold or auctioned to other parties or other securities who wish to become members of the stock exchange (IDX shareholders).

Previously, Deutsche Sekuritas, led by Modestus Reggy Melhen Susanto, a former journalist for The Jakarta Post and a former analyst with Panin Sekuritas and Macquire Group, noted that the company’s shareholders were DB International (Asia) Limited 14%, Elisabeth Tanzil 1%, and Deutsche Asia Securities Pte. Ltd. 85%.

The withdrawal of these securities from Indonesia is in line with the massive restructuring measures taken by Deutsche Bank AG. This German bank decided to stop the stock trading business and cut 18,000 employees until 2022 later.

This was done because the bank continued to experience chronic losses and decided to streamline its business and focus solely on serving European companies and retail customers.

Nomura Sekuritas Indonesia

Nomura Sekuritas Indonesia is a joint venture securities company that was established on December 11, 1989. This broker with the FG code has a business license as an underwriter and brokerage.

As reported by CNBC Indonesia, on July 19, 2019, Nomura reduced business activities, especially brokerage in Indonesia.

Based on a search on the IDX website, Nomura Sekuritas Indonesia, such as ML and DB, no longer appear on the Exchange Member Profile page.

Referring to the financial statements of the first quarter of 2019, the company’s shares are majority held by Nomura Asia Pacific Holdings Co Ltd 80.8% based in Japan, the rest is owned by Nomura International (Hong Kong) 11.4%, Nomura Holdings Inc. 4.2%, PT Jan Darmadi Investindo 3%, and PT Santinilestari Lokaprima 0.6%.

Meanwhile, as of the end of March 2020, the composition of the company’s shareholders has changed. Nomura Securities Singapore Pte Ltd controls 96.4%, then PT Jan Darmadi Investindo holds 3.0% and PT Santinilestari Lokaprima 0.6%.

According to the explanation in Nomura’s financial statements, there was a transfer of 241,000 shares with a nominal value of Rp 241 billion belonging to Nomura Asia Pacific Holding Co Ltd, Nomura International (Hongkong) Ltd and Nomura Holding Inc to Nomura Securities Singapore Pte Ltd on December 20, 2019.

Meanwhile, Jan Darmadi Investindo is the ultimate parent company of property issuer PT Jakarta Setiabudi Internasional Tbk (JSPT) or JSI, as recorded in JSI’s financial statements as of March 2019.

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