Separating underwriters from brokers

The government via the stock market regulator (Bapepam) is going to revise the Capital Market Law. The revisions include separation of investment management units from underwriting and brokering functions (The Jakarta Post, 22/8).

Not surprisingly, most securities firms react negatively as majority of them mix the two functions. The president director of Trimegah Securities for example reportedly said that the policy would "put pressure on our efficiency programs". He said that Bapepam should instead focus on enforcing good corporate governance.

I think his argument is ill-founded. What the Bapepam is doing is exactly an effort to enforce good corporate governance.