Indonesia - Clearstream

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Market Profile Summary of foreign exchange regulations FX transaction type Regulation Outright Buy, value today, TOM Underlying documentation is required, like a buy /receive against payment settlement and Spot instruction via SWIFT, tested telex, tested fax or Reuters Monitor Dealing System. Forward Value and Swap • Minimum term is 3 months, but no longer then the time frame of the investment (no overnight Swaps); • Underlying documentation is required, like buy/receive against payment settlement instructions via SWIFT, tested telex, tested fax or Reuters Monitor Dealing System. Outright Sell/Delivery against • The regulation does not govern the sale of IDR against foreign currencies for value payment today, tomorrow and spot. These transactions can be executed without supporting documentation of the underlying transactions. Even though the sale of IDR spot is not restricted, it must be proved that the source of funds is an economic activity, for example, settlement of a delivery against payment instruction. According to market practice, the sale of IDR is held off until settlement of the related delivery against payment instruction. This is to avoid a situation where the transaction fails and no more supporting documentation is available to cover the FX trade. • The regulation does not impose any restrictions on repatriation of cumulated IDR balances in non-resident accounts. Derivative Maximum USD 1 million per bank. SBI (Sertifikat BI) as underlying Not allowed. transaction to book Forward Value and Swap Penalty 10% of threshold breached. IDR transfers under Declaration of underlying transaction is required (for example, related securities IDR 500 million settlement instruction). Payment systems • National payment system (SPN) BI operates the SPN for the electronic real-time transfer of cash funds in Indonesia on a gross basis. The system is open to banks, non-bank financial institutions, other entities that transfer funds and switching1 companies. To access SPN, members are required to maintain accounts at BI. The SPN (RTGS) system is open daily from Monday to Friday between 06:30 and 16:30. Cash payments may only be made if funds exist on the payer's account at the central bank. Payments are considered final and irreversible upon the book-entry crediting of the receiver’s account. Back value payments are not possible via the SPN (RTGS) system. • Bank Indonesia National Clearing System (SKN) The SKN is a paperless clearing system used to clear funds transfers for amounts up to IDR 100 Million. Under the SKN, same-day transfers can be executed through the issuance of a physical credit note for interbank payments and via check for payments between bank to nonbank entities. 1. Switching is the process of liquidating a position in exchange for other securities with better prospects for growth, yields or capital gains. 20 December 2011 Clearstream Banking Indonesia - 8 Market Profile
Registration Fixed income securities Most bonds are bearer instruments and registration is not required. Indonesia Equities Registration is done automatically by crediting the book-entry/scripless securities to the KSEI account. The account holder is considered to be the registered owner. Physical securities are registered upon receipt of the investor’s instruction or a standing instruction. Certificates must be endorsed under the investor’s name before registration. The registration process may take up to 14 business days depending on the number of certificates; during the corporate action peak season, this period may be longer. Neither a central registrar nor the nominee concept are recognised in Indonesia. Physical shares are registered with each individual issuer and the appointed registrar. Account structure at KSEI The central depository (KSEI) requires direct participants (custodian banks, brokers) to open stock accounts for their clients. Such accounts are on account level (that is, Clearstream Banking) and not on final beneficiary basis. Clients may open a sub-account showing the name of the final beneficiary in order to benefit from any Double Taxation Treaty agreement. In the event of KSEI bankruptcy, the assets under custody are considered to be third-party’s assets and as such will not be included in KSEI’s own assets but will be distributed as per the KSEI’s records. Account structure at BI BI, as the central registry, will only deal with banks (for proprietary holdings) and with sub-registries - that is, custodians - (for third-party holdings). Each sub-registry maintains an omnibus account and a single cash account at BI to facilitate settlement of government bonds (GDS) and BI certificates (SBI) and, in turn, investors must open accounts with the sub-registries. The accounts at sub-registry level should reflect the owner of the GDS and SBI (that is, client’s name “for and behalf of” the owner). Stamp duty Stamp duty is not applicable in the Indonesian market. Penalties (buy-ins etc.) All stock exchange trades must settle on T+3. If any shortage of securities is not covered by T+3, KPEI will impose a penalty called the “Alternate Cash Settlement” (ACS). ACS is 125% of the highest market value between T+0 and T+3. If the broker does not have sufficient cash to pay the penalty, KPEI will use the guarantee fund to cover the short cash position and substitute the relevant buying broker. The selling broker will be suspended for the day pending investigation by the JSX. Brokers that are aware of insufficient securities on T+3 have the option to buy them from the cash market (T+0 settlement cycle) or via the Securities Borrowing programme. KPEI will net off the broker’s position as of SD from the cash market and the regular market. Buying brokers with insufficient cash on T+3 will be suspended and KPEI will use the guarantee fund to cover the obligations. Before suspending the broker, KPEI checks whether the broker has other collateral, including offline collateral such as time deposits or bank guarantees pledged to KPEI. Clearstream Banking 20 December 2011 Market Profile Indonesia - 9
Page 1 and 2: Indonesia Market infrastructure Ins
Page 3 and 4: Investment regulation Holding restr
Page 5 and 6: Settlement process Settlement cycle
Page 7: Indonesia Documentary proof require

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