THE C-BEST SYSTEM

INTRODUCING, THE TEAM BEHIND

THE C-BEST SYSTEM

The C-BEST system (The Central Depository and Book Entry Settlement System) is ready for use to support the scripless program. By the way, who’s behind this C-BEST success?

On November 17th 1999, the KSEI IT team installed the first phase of the C-BEST system. The installment comprised static information management, asset management, securities Deposit, Securities withdrawal, securities transfer, and user maintenanceapplications. Installment of the second phase was conducted from February until March 2000. When the C-BEST system was ready for use on July 2000, the Business Division conducted set up database. In the future, said Andy Koerniawan, the task of the Depository and Shares Information would be to develop the system. Because what we have now, he said, is not guaranteed perfect. “Not all KSEI business specifications have been fulfilled by the vendor”’ he expressed.  “No matter what, never ending testing, never ending socializing and never ending customer service", explained Dian. It seems that the business team also functioned as customer service. This is viewed from their work serving participants and issuers by answering through the phone around matters of C-BEST operation. Along the transition period, KSEI came across the unpreparedness of some brokers. Even after having been trained, brokers continue to make mistakes in following the procedure of entry into the C-BEST system, causing frequent calls about system entry.

KSEI’s crew may now take a deep breath. At least the first phase of physical shares conversion into C-BEST was well accomplished on July 11th 2000. Even capital market practitioners can proudly smile. The long awaited scripless trading has at last come to reality. The average conversion success rate of the four issuers that pioneered the use of C-BEST, namely PT Dankos Tbk, PT Suparma Tbk, PT Multipolar Tbk, and PT Sari Husada Tbk, was above 60 percent. That of PTSari Husada Tbk was even 100 percent. This means that all the shares of PT Sari Husada Tbk have been entered into the C-BEST system. According to KSEI Director Benny Haryanto, with C-BEST in operation, participants can conduct stock exchange and outside stock exchange transactions through C-BEST. As it is now, he commented, scripless trading is not yet running perfectly, because there are still physical shares and Mahameru system immobilized shares (the pre C-BEST temporary system). With C-BEST in operation, participants are exposed to three forms of different transaction settlements (Transaction settlement by scrip; Book-entry settlement through immobilization (Mahameru); and, Book-entry through C-BEST). “KSEI will consolidate these settlement systems in steps”’ expressed Benny. At the end of June, the KPEI clearing system, given the name of e-CLEARS, will be ready to operate. This being the case, the securities migration process from Mahameru to C-BEST can begin on August. As planned, Mahameru recordings of bonds will be first to be transferred to C-BEST. If all goes well, other securities will follow entry into the C-BEST system. There are 40 shares recorded in Mahameru; 15 of them are of issuers in listing at the stock exchange in 2000; and the rest immobilized during corporate action activities. Meanwhile, there are Rp 3.8 trillion worth of bonds and 105.6 million warrants in Mahameru. The migration process, according to Benny, is hoped to be accomplished on end August. As of September, he said, all KSEI participants will exclusively apply the C-BEST system for scripless depository and transaction settlement. “As planned, all share settlements and depositories of the Indonesian capital market will be conducted through the C-BEST system by end 2001”, expressed Benny. Preparation There are many divisions involved in the development of the C-BEST system, among them, The Management, Information System, Legal, Internal Supervision and Depository & Shares Information Divisions. The Business Division, according to Dian Kurniasarie, is in charge of business requirement. The business team devises business specifications to choose the vendor. After CAPCO – the Belgian system developer – had been chosen in early 1999, the KSEI and CAPCO teams sat together. Initial discussions resulted into agap analysis. It is a comparison between what the vendor has and what KSEI requires. At the same time, the KSEI Legal Division conducted contract negotiations with CAPCO regarding system provision, system modification according to need, project management, funding and technical support. The contract was signed on July 4th1999. The next step was, explained Dian, the vendor delivered its system from Belgium to Indonesia. Then came the testing step, to find out whether CAPCO’s system suited the business specifications drawn out by KSEI. During testing, KSEI was accompanied by the independent auditor Price Waterhouse Cooper (PWC). After testing was completed, and the system modified (customization) according to the needs of the Indonesian capital market, the KSEI business team began with socializing internally as well as toward participants. The KSEI SOP (Standard Operational Procedure) for the settlement and depository system was also created.

And all that, said Evy Sofyati, after KSEI had given every day training to 15 brokers. Besides classes on theory, brokers were given the opportunity to use the C-BEST system hands-on. “But still many brokers repeatedly ask about basic procedures that they had actually already been given training for”, revealed Evy. The IT Team The Management Information System Division is the one most exposed to the system. They were the ones who installed the system and made the KSEI-to-participant network. There are many divisions of IT; among them are the Networkand Data Information Divisions. IT team member in charge of network and infrastructure Dwika Sudrajat, together with a colleague, prepared the network from scratch until its present operational state. The IT team must shape a system that is suitable for the needs of the Indonesian capital market.  “Work description starts from making the concept, then designing, choosing, development, choosing a vendor, installation, revision, installment preparation, installment and system check-up until it’s stable”, expressed Dwika. What is quite troublesome for the IT team, said Dwika, is that KSEI had already completed installments and connections for many securities companies that then suddenly moved office. The IT team in this case had no choice but to repeat theset up for the needs of such brokers. The IT team often has to cross a number of other obstacles, like complaintscoming from the elements of the participant’s environment. For instance, there was a venue that opposed the works of installing the system network. And there are participants that demanded priority for their system network installments. “On the contrary, there were participants already scheduled for system set up, but refused because they wanted to be last in the system installment list”, commented Dwika. The C-BEST system network has now covered the entire area of Jakarta. Upon a broker’s request, we are in the midst of opening the network to Surabaya. KSEI utilizes several communication media, such as satellite, microwave radio, ISDN (integrated services digital network), list line, and dial up (ordinary telephone line) for remote areas far from the location of the SCBD golden triangle. Even with the completion of system installment, explained Hartarto, many problems lay ahead. Systems need an overhaul after a certain period. “The average age of a network is two years. Networks develop, the services of the TIM Division will remain a requirement”, he stated. As for the System Back Up Support Division, said Syafruddin or our buddy Alex, becoming first line support often puts him under very high pressure. This division is supposed to master this relatively new system. “My thoughts are on the problems that will later occur in the system for which we have no solution, not to mention the time constraints”, he expressed. Fortunately, added Alex, CAPCO is very open and willing to transfer knowledge to KSEI. “One more advantage, the KSEI system was earlier live than that of KPEI, opening the door to experiencing problems ahead of time”, said Alex. Arda Billy from the Legal Division sees a lot of positive points in this scriplessproject. “There is much to be learned, because we are learning by doing", he said. According to him, given such a strictly defined target, the scripless team can learn how to cope with under-pressure stress. Besides technical, this provides managerial learning, on how to use limited resources to meet an existing target. The Legal Division is now perfecting and adjusting regulations in alignment with the operating scripless system. http://www.ksei.co.id/en/FOKUSS/Edisi%208%202000/fks8hal2.htm