Bond Trading System in Indonesia

Abstract:
In this paper we will discuss about the bond trading system in Indonesia. Mainly, for bond trading Fixed income-trading system is widely used by the investors.
In Indonesia, mainly the fixed income trading system (FITS) is used for bond trading. FITS do not require any script. It integrates three mechanisms namely, clearing, settlement activities and trading.
Retail bonds are the most popular bonds in Indonesia. It is traded with a nominal initial amount, 5 million Rp. Fixed income trading system allows the Indonesian investors to trade with the retail bonds.
FITS use an Automated Securities Trading System platform to enable the traders to operate remote trading. That is, the traders need not present at the trading floor always. The entire bond trading activities may be operated from the office of the Exchange Member.
Fixed income trading system allows the traders to run their operations on the two bond trading boards, namely, Regular Outright Board and Negotiated Board, of Indonesia Stock Exchange.
Regular Outright Board is a kind of trading mechanism that allows “anonymous continuous auction” to set the market prices. Here, the trading is done on the basis of time priority and price.
On the other hand, Negotiated Board is is a kind of trading mechanism, which allows the Exchange Members to make a report of the results of their negotiation with other parties or Exchange Members.
Therefore, the bond traders of Indonesia can choose any of the two above-mentioned trading mechanisms to run their operations.