Capital markets are markets where traded funds in the form of securities, long-term (more than one year), such as stocks, bonds, evidence of benefits, warranties, proof of equity and other securities with a maturity more than one year. Activation of the capital market for longer than financial markets to raise funds for the long term is much more difficult than collecting short-term funds.
The new government can take concrete steps in order to realize capital markets and issued three important decisions regarding the capital market through a Presidential Decree. 52 of 1976 dated 28 December 1976, as follows:
a. Establish capital markets in Jakarta, which was then called the Indonesia Stock Exchange and was inaugurated by the president in 1977 with its inaugural sale of shares of PT Semen Cibinong shares to the public (go public).
b. Established PT Danareksa (Persero), whose duties are:
1) the guarantor (underwriter) expenditure of new shares will go public.
2) Buy shares of other companies (established) for resale to the public through the Indonesia Stock Exchange. This means that PT Danareksa act as a broker or securities broker.
3) Maintaining the stability of exchange rate effects.
c. Forming the Capital Market Executive Agency (Bapepam), which serves as executor and supervisor of capital markets and is responsible to the Ministry of Finance. In 1983, the name was changed to the Indonesian Stock Exchange Jakarta Stock Exchange (JSX), and later established in Surabaya Surabaya Stock Exchange (SSX). And in its development in 1990 reorganized the functions of Bapepam, among others, a dual role as implementers and supervisors abolished and only serves as an oversight body only by the name of the Capital Market Supervisory Agency. As for the technical implementation in the stock exchange more entrusted to the United Merchants Exchange and Securities (PPUE).