Futures contract trading is under UU No. 32/1997 with supervisory body: BAPPEBTI - Badan Pengawas Perdagangan Berjangka Komoditi Indonesia. (Commodity Futures Trading Regulatory Agency), while stock trading is under UU No. 8/1995 with supervisory body BAPEPAM - Badan Pengawas Pasar Modal Indonesia Capital Market and Financial Institution Supervisory Agency)

There are several other differences among other:

Futures Contract Trading: Aiming to fulfill hedging instrument need, Margin Trading, shortperiod investment, short or long positions, Bearish-Bullish-OrientedInvestment, position limit, etc.

Stock Trading : Aiming to mobilize fund, Margin Trading limited, Long perio investment,bullish oriented investment, no limit position, etc.

If you have not yet closed a position until maturity date, you will get physical delivery of Olein as much as the volume you buy from the seller after you pay the price of the volume to the seller.

If you do not want to get involved with physical delivery of Olein, you can sell it (close buying position) before the maturity date. Profit-lost of the transaction is counted at least once a day (could be more often). The result will be credited or debited daily to your account. You should keep your account so that the balance is not less than what is determined by your broker.

You can open an account with Futures Broker. Futures Broker will debit and credit your account each day for your profit/lost statement. The balance shall be reported to you each time you trade or at least once a month. Your money is not Futures Broker’s money and therefore your money will be kept at a segregated account in the bank which has already been approved by Bappebti and PT. Kliring Berjangka Indonesia.

Although your profit/lost is not realized, but your profit/lost is still calculated daily as a guarantee if you fail to fulfill your obligation. In addition to daily lost-profit there are more money that you are not able to withdraw from your account, as long as you hold buying or selling position. The total amount which can not be withdrawal is determined by PT. Kliring Berjangka Indonesia, based on experience about possible lost you can have in one day. This total amount must be retained as a guarantee supposing you can not keep the minimum balance that has been determined.

If you sell 1 lot of Olein on February 2008 at the price of IDR. 7.500, -/kg, it means your position is “short" 1 lot. If at the end of the day, the Settlement Price is Rp 7.550,your account shall be debited of Rp 1.000.000 (20.000 kg x (Rp 7.550 – Rp 7.500)) (1 lot of Olein = 20 tons). In your account, beside Rp 1.000.000,-, you must also have Rp 5.000.000.

In Futures Contract term, Rp 1.000.000 is usually called as Variation Margin and Rp 5.000.000 is usually called as Initial Margin The Initial Margin is the fund that you have to pay at the beginning as a guarantee if you fail to fulfill your obligation. The Initial Margin is determined by KBI. For Olein, to trade 1 lot you have to pay Rp 5.000.000.

If at the end of the day after tomorrow, settlement price rises to Rp 7.600, so your account will be debited Rp 1.000.000. If the settlement price of the next day fall into Rp 7.575, your account will be credited Rp 500.000 (20.000 kg x Rp 7.600 – Rp 7.575 )

Your money, Rp 5.000.000 still remains in your account if you do not buy back 1 lot of Olein on February 2008 (close the buying position) or deliver 20.000 kg of Olein. If you do not have Olein of 20.000 kg, it is better to buy back before Febuary 1 st 2008.

Notice

a.You can sell though you do not have Olein (you can “short” the market)
b.The seller also has to put guarantee (not only the buyer).
c.If you have buying or selling position, some amount of your money must still remain in youraccount.

There will be no guarantee that you’ll have the physical delivery. PT Kliring Berjangka Indonesia also does not guarantee the physical delivery. They only guarantee the loss that you have suffered because the other party does not fulfill their obligation. That loss will be replaced by PT. Kliring Berjangka Indonesia. In fact, it is done each day by crediting or debiting your account.

OTC transaction (over the counter) is a transaction that is carried out outside of the exchange. Actually, transaction outside of the exchange is very common. However, if the transaction has relation with retailed public fund, the parties who are involved in this transaction must put margin and the transaction must be registered in the Jakarta Futures Exchange.

OTC Financial Products transaction such as foreign exchange and stock index, have existed before the existence of authority. This transaction is performed by the Commission House (CH). Futures trading regulation conduct the adjustment that customer will no longer become the broker direct opponent. They have to make transaction through futures trader and the futures trader has to give quotation continually during the trading hours. The broker for OTCtransaction is called as futures broker and the party continually gives quotation called as futures trader.

Bilateral system is OTC transaction, where the customer transaction opponent is always a futures trader side that is obliged to give price quotation during trading hours (many parties opposing 1 party).

Multilateral system is a transaction between various parties with many other parties (many to many), so that transaction opponent is unnecessary known and all transactions happens in an organized market or in an exchange.

JaFET (Jakarta Futures Electronic Trading System) is a system that is owned and developed by BBJ. Jafets is used for multilateral transaction in an exchange. Up to now Jafets has entered into a remote trading version where transaction can be done from a long distance (from each futures broker’s office). BBJ plans that in the year 2008, Jafets will be using an on-linetrading system

Since the beginning, we are interested in developing financial products because the financial products are much more known by public. In addition, our consultant also suggested us to have financial products in order to success. Unfortunately, BBJ is limited in developing commodity products. BBJ is only able to develop several commodities by the President degree

The presence of commodity futures contract of a commodity can fulfill the need of hedging instrument on the related commodity price fluctuation. Market executants from consumer side shall no longer do purchasing redundantly to secure raw materials needs or to ascertain the interest of buying price, because it is sufficient to take a long position for futures contract of the related commodity so that the market doesn't face a drastic depreciation ofsupply or in other words, the price doesn't face an excess rise. Similarly from producer’s side, it is unnecessary for them to do the sale redundantly, which is motivated by worries about the drop of price, which in turn triggers a drastic price decline. Now, it is enough for them just to take a short selling position in futures contract of the related commodity.