STOCK PRICE APPRAISAL INSITUTION

Stock Price Appraisal Institution or also known as alien "Bond Pricing Agency" is an independent institution for its role in providing a fair price benchmark for bonds in order to facilitate investors in ascertaining the value of their investment.

This institution must be independent, in the sense that these institutions are not governed by a particular party as a holder of control where the formation of this institution in order to encourage the creation of mechanisms of price formation and liquidity of securities markets and sukuk and other securities, objectively, independent, credible and accountable so it can be used as a reference by investors in securities transactions and the determination to overcome adversity market price (mark to market) on the bonds illiquid / not actively traded.

Diluyar bond transactions conducted many exchanges (over the counter) so that there is no official price is published, so it is necessary for an independent and credible institution that has the function of assessing the price of debt securities), sukuk and other securities.

In order to meet the Government's commitment to improve bond market liquidity and stability as contained in Presidential Instruction No. 6 Year 2007 concerning "accelerated policy of real sector development and empowerment of micro, small and medium enterprises, then on Wednesday, September 19, 2007, Capital Market Supervisory Agency (Bapepam) issued a new rule, namely Rule Number VC3 on Stock Price Valuation Agency, Decision of the Chairman of Bapepam and LK Number: Kep-329/BL/2007 September 19, 2007.

As for the points requirements prescribed in the Regulations referred to among others the following:

Procedures for Establishment of Securities Price Appraisal Institute.

Stock Price Appraisal Institute (BPA) in conducting its activities required to conduct fair market pricing of debt and sukuk are objective, independent, credible and accountable.

BPA paid up capital of at least Rp 30,000,000,000.00 (thirty billion rupiah).

BPA stock ownership to any legal entity in the financial sector at most 10% and for other legal entities in the financial sector is limited at most 20%, except for share ownership BPA by Self Regulatory Organizations (Self-regulated Organization) that together can have a 50% .

Members of the board of directors and commissioners must meet such requirements in accordance with the duties and functions, among others, each has a character of knowledge in the field of debt and Sukuk securities and other securities.

BPA shall include:
have a business plan and strategy from the perspective of reliable domestic and regional levels;

planning to continue to improve market transparency, promotion, education and debt securities markets, sukuk and / or other securities as a whole;

reasonably determine the amount of service fee pricing fair market [[effect (finance) | securities of Debt and Sukuk and other additional services provided as well as develop fee structures that are clear and consistent and must disclose to the customer;

experts, among others, have experienced in trading debt securities, sukuk and other securities or in fields related to the assessment of the price of debt securities, sukuk, and / or other securities; and

have at least the pricing functions, information technology, internal monitoring and complaints, and research and development.

BPA is prohibited to give recommendations to other parties to buy or sell securities.

BPA shall reside and execute operations in Indonesia

Liquidity Risk
Liquidity risk is the risk that arise if a party can not pay their obligations due in cash. Although the party has property worth enough to pay off their obligations, but when those assets could not be converted into cash immediately, then the party is said to be illiquid.

This could happen if the debtor can not sell his property in the absence of other parties interested in the market to buy it. This differs from the drastic decline in asset prices, because in case of falling prices, the market believes that the assets are worthless. The absence of interested parties to exchange (buy) assets is likely only due to the difficulty to reconcile the two sides. Hence, liquidity risk is usually more likely occur in the newly emerging markets or small-volume.

Liquidity risk is a financial risk due to the uncertainty of liquidity. An institution can reduce its liquidity if its credit ratings fell, suffered an unexpected cash expenditures, or other events that cause the other party to avoid the transaction or provide loans to these institutions. A company can be exposed to liquidity risk if markets followed decreasing liquidity.

Risk Management
Risk management is a structured approach / methodology in managing uncertainty related to the threat; a series of human activities including: risk assessment, developing strategies to manage and mitigate risk by using empowerment / resource management. Strategies that can be drawn between the other is to transfer risk to another party, avoiding risk, reducing the risk of negative effects, and accommodate some or all of the consequences of certain risks. Traditional risk management focuses on risks that arise by physical or legal causes (such as natural disasters or fires, deaths, and lawsuits. Management of financial risks, on the other hand, focused on the risks can be managed using financial instruments.

The objectives of the implementation of risk management is to reduce the risk of different related fields that have been chosen at a level acceptable by society. This may include various types of threats caused by environmental, technological, human, organizational and political. On the other hand the implementation of risk management involves all means available to humans, particularly, for risk management entity (human, staff, and organization).

In the development risks discussed in the risk management can be classified into

Operational Risk
Hazard Risk
Financial Risk
Strategic Risk

This raises the idea to apply the implementation of the Integrated Corporate Risk Management (Enterprise Risk Management).

Risk management starts from the process of risk identification, risk assessment, mitigation, monitoring and evaluation.
Understanding Risk
Risks associated with this uncertainty occurs because of lack or unavailability of adequate information about what will happen.

Something that is uncertain (Uncertain) can cause beneficial or disadvantage by Wideman, uncertainty raises the possibility of benefit is known as opportunity (Opportunity, whereas uncertainty generate adverse known risk (Risk).

In general, risk can be defined as a situation faced by a person or company where there is the possibility of harm. What if the possibility of facing can give a huge advantage, while if they lose just a little? For example buy loterei. If you are lucky it will get a huge reward but if not lucky money used to buy relatively smaillys.what is loterei is also classified as Risk? the answer is that it is also considered a risk. During a loss even though no matter how small it is considered a risk.

Risk category
Risks can be categorized into two forms:

1. speculative risk, and
2. pure risk.

Speculative Risk
Speculative risk is a condition that dihadai company that can provide benefits and can also provide for possible losses.

Speculative risk is sometimes also known by the term business risk (business risk). Someone somewhere who invest funds face two possibilities. The first possibility of profitable investment or investment even harmful. Faced by such a risk is speculative. Speculative risk is a situation faced that can provide benefits and can also result in losses.

Pure risk
Pure risk (pure risk) is something can only cause harm or not happened and probably not profitable. One example is a fire, if the company menderiat fire, then the company will suffer losses. Another possibility is not there is a fire. Thus fire only cause harm, not cause profits, unless there is deliberate to burn with certain intentions. Pure risk is something that can only cause harm or not happened and probably not profitable. One way is to avoid pure risk insurance. Thus the amount of losses can be minimized. that's why sometimes known as pure risk term that can be insured risks (insurable risk).

The main difference between pure-risk speculative risk is the possibility of profit exists or not, for there is still the possibility of speculative risks, while profit for the risk can not be pure profit possibility.

Credit Risk
Credit risk or in a foreign language is called Credit risk is a risk of loss due to disability (default) from the borrower for its debt payment obligations both debt principal or interest or both.

Faced by lenders to consumers
Most lenders use a way of assessing their creditworthiness in order to make each customer risk rating and then apply to their business strategy. With products such as unsecured personal loans or mortgages, lenders will charge higher interest rates on high-risk customers and vice versa. With revolving products such as credit cards and overdrafts, risk is controlled through careful setting of credit limits. Some products require security, usually in the form of property.

Faced by lenders to business
Lenders will offer a cost / benefit of a loan on the basis of risk and the interest charged, but interest rates are not the only method of compensation for risk. Additional protection in the form of restrictions as stipulated in the loan agreement will enable the monitoring by the lender (creditor) of the borrower (debtor) is for example in the form:

Restrictions on the debtor for actions that could affect the financial borrowers such as buying back shares, paying dividends, or borrowing further.

Authority to conduct supervision over the debt by requiring an audit and monthly financial reports.

The right to creditors to ask for immediate repayment of the debt that gave the event a special event or if the ratio financing such as debt / equity decreases.

A recent innovation in order to protect creditors and bondholders against the risk of default are in the form of credit derivatives known as credit default swaps. These financial contracts allow companies to buy a protection (protection) against default risk from third party, the seller of protection. Seller of this protection are periodically obtain compensation as a form of compensation for the risk taken by him that is in the form of an agreement to purchase these bills the event of default.

Risks faced by business
Companies face the "credit risk" in terms of such companies do not receive the "advance payments" in cash for products or services it sells .. With the delivery of goods or services in front and collect payment later, the company took a risk during the period of delivery of goods or services with the time of payment.
Some companies have d3epartemen credit risk which is responsible for assessing the financial health of the consumers to decide further credit or not. In this case can also use third party service that is peruisahaan that provides credit rating services in the field by providing credit ratings such as Moody's, Standard & Poor's, Fitch Ratings, and others who provide paid information.

This credit risk is not seriously managed by small companies that have only one or two customers only, so the company is very vulnerable to the problem of default payment or late payment by customers.

Risks faced by individual
Consumers may see the credit risk in a direct form such as a depositor in the bank or the debtor. They may also face credit risk when doing business transactions in a way delivery of advances to such counterparty to purchase a home or rental house. Employees of a company are also very dependent on the ability of companies to have salary payments also include the credit risk in condition as an employee.

In some cases, the government realized that the ability of these individuals to evaluate the credit risk is very limited and this risk may reduce economic efficiency so that the government conduct a variety of mechanisms and legal measures to protect consumers against this risk. Bank deposits in some countries are secured by insurance (to limits specified value) for deposits of individuals / individuals, which effectively will reduce their credit risk to banks and increase their confidence to use banking services.