Jakarta, Gizmology – At the end of last February, the Indonesia Investment Alert Task Force (SWI) stated that the Gotrade application did not yet have official permission from the Financial Services Authority (OJK). So that people are asked not to trade on the stock application. It didn’t take long, this week Gotrade Indonesia was officially launched.
The presence of the Gotrade Indonesia application addresses concerns regarding the legality of this application. The reason is, that even though it already operates in more than 100 countries, Gotrade must have a permit and be registered if it wants to operate in Indonesia.
“If there is a fraud with Gotrade, the public will experience difficulties, considering that Gotrade does not have an office and a responsible party in Indonesia,” said Tongam L. Tobing, Chair of SWI.
Indonesia itself is an important market for Gotrade. Although it does not clearly state the number, it is stated that there are hundreds of thousands of users who use Gotrade in Indonesia. Meanwhile, last June 2021, Gotrade also received funding, one of which was from Gojek Co-founder & CEO Kevin Aluwi. The US$7 million investment was led by LocalGlobe. Apart from Kevin, a number of local venture capitalists were also involved, such as Amand Ventures, Prasetia Dwidharma, and Brama One Ventures.
Gotrade Indonesia App Partners with Valbury Asia
Info on the presence of the Gotrade Indonesia application is sent to application users in Indonesia, including the author. Rohit Mulani, Founder & CEO of Gotrade said that this is his first local product. For information, this Singapore-based startup was founded in 2019 by David Grant, Norman Wanto, and Rohit Mulani.
“We chose Indonesia as our first local market. Indonesians are subject to mutual funds with expense ratios exceeding 5%, savings products such as gold with 3% spreads and ubiquitous hidden fees that take up a large part of their portfolios. We have decided to change that,” he said.
Interestingly, Gotrade Indonesia is present in Indonesia but not through licensing or registration with the OJK, but CoFTRA (Commodity Futures Trading Supervisory Agency). According to Gotrade, local stockbrokers are not allowed to offer US shares in Indonesia. However, local derivatives brokers, regulated by CoFTRA, are permitted to offer US stock derivatives in Indonesia. That is the reason Gotrade Indonesia’s licensing does not refer to OJK regulations, but CoFTRA.
“This prompted us to partner with Valbury Asia Futures, the Jakarta Futures Exchange, and Kliring Berjangka Indonesia (Persero), all regulated by CoFTRA, to create Indonesia’s first fully supported US stock contract that gives end-users market access to US stocks. Rohit said.
Under the partnership, Gotrade Indonesia has launched the first fully backed US stock contract that gives users market access to US stocks.
The first platform to fully support trading
Gotrade admits that it is not the first platform to offer US shares in Indonesia. Nevertheless, it still claims to be the first platform to fully support all trading.
“This means that all trades on Gotrade Indonesia result in a contract between the user and Valbury. Valbury then entered into compliant trading with Alpaca Securities LLC, a FINRA-licensed broker-dealer in the US,” explained Rohit.
Since trades are executed directly in the United States, all contracts are fully backed by real shares held in the United States. For each share (or a fraction thereof) held by a user in Gotrade Indonesia, there is a related share held by Valbury in a separate brokerage account at Alpaca Securities LLC.
The benefit of fully supporting trading is that there are no other hidden cost spreads. Other providers hide their fees of up to 1% per trade which are built into the bid-ask spread on the stock. At Gotrade Indonesia, since both trades described above occur in real-time, all trades are executed on National Best Offers and Offers in accordance with US Stock Exchange Commission regulations. Gotrade does not add any spread to this price.
“Gotrade Indonesia will allow all Indonesians to invest from as little as $1 in stocks like Tesla, Apple, and Facebook on a free, easy-to-use platform,” he concluded.
The Indonesian version of this article can be read in Gizmologi.ID