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2012-06-08

Bank Indonesia Circular Letter No. 14/18/DPM on Fourth Amendment to Open Market Operation Regulations

Bank Indonesia issued Circular Letter No. 14/18/DPM to amend regulations governing Open Market Operations, specifically introducing a transaction mechanism for Term Deposits in foreign currency. The regulation mandates that these deposits be conducted in US Dollars with tenors of 7, 14, or 30 days through an auction mechanism using fixed or variable rate tender methods. It further details the procedures for early redemption, conversion of term deposits into FX Swaps to obtain rupiah liquidity, and the associated settlement obligations and sanctions for non-compliance.

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Sumber Data Legal Information Division, Department of Legal Affairs

6/8/2012 3:56 AM

Judul Bank Indonesia Circular Letter No. 14/18/DPM dated June 8, 2012 concerning the Fourth Amendment to Bank Indonesia Circular Letter No. 12/18/DPM dated July 7, 2010 Regarding Open Market Operation

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Regulation :

Bank Indonesia Circular Letter No. 14/18/DPM dated June 8, 2012 concerning the Fourth Amendment to Bank Indonesia Circular Letter No. 12/18/DPM dated July 7, 2010 Regarding Open Market Operation

Effective Date :

June 8, 2012

Summary :

Transaction on Term Deposit in foreign currency is a transaction on the placement of funds in foreign currency of the participants of the transaction on Term Deposit in Foreign Currency for a certain period with Bank Indonesia. The transaction on Term Deposit in foreign currency shall use US Dollar currency with periods of 7 days, 14 days and 30 days. On such placement, Bank Indonesia shall provide interest. The Participants of Transaction on Term Deposit in Foreign Currency are OMO Participants which constitute foreign exchange banks. In submitting a bid for Transaction on Term Deposit in foreign currency, OMO Participants may submit the bid directly or through Intermediaries. The subjects of regulation in relation to transaction on Term Deposit in foreign currency are as follows:

It is conducted through an auction mechanism via RMDS by using fixed rate tender or variable rate tender method. The auction is held every Wednesday or another business day determined by Bank Indonesia with window time at 08.00 – 16.00. The auction is announced by BI through LHBU System or other facilities determined by BI. Bids may only be submitted for a maximum of 2 (two) times within each period offered by BI. For such bids, the transaction participants may only submit 1 (one) correction for each bid in compliance with the requirements for bid submission. Bank Indonesia announces the result of determination of auction winner through LHBU System and makes individual confirmation to the auction winner through RMDS or other facilities. Bank Indonesia conducts the settlement of the transaction of Term Deposit in foreign currency within 2 (two) business days following the transaction date, where the settlement is conducted for every 1 (one) deal ticket. On the settlement date, the Participants of Transaction on Term Deposit in Foreign Currency must transfer the settlement obligation of the transaction on Term Deposit in foreign currency for each bid won to Bank Indonesia account with correspondent bank. In the event that a participant fails to fulfill the settlement obligation, the transaction is deemed to be cancelled and the participant is subject to sanctions.

The transaction participants may submit early redemption on the Term Deposit in foreign currency having a minimum period of 3 days following the transaction settlement of the transaction on Term Deposit in foreign currency. The aforementioned submission may be made on any business day except on the day of auction through RMDS. The Participants of Transaction on Term Deposit in Foreign Currency may submit a conversion of the transaction on Term Deposit in foreign currency into FX Swap transaction, if they require rupiah liquidity, namely FX Swap transaction on the sale of USD/IDR by Bank Indonesia. The subjects of regulation in relation to the conversion of transaction on Term Deposit in foreign currency into FX Swap are as follows:

The conversion is submitted through RMDS. FX Swap transaction resulting from the conversion of Term Deposit is conducted within a minimum period of 7 (seven) days. The conversion settlement of the transaction on Term Deposit in foreign currency is conducted T+2 as from the date of conversion submission, on which BI will record the conversion of foreign currency from the early redemption on Term Deposit in foreign currency into source of fund for foreign currency settlement of FX Swap transaction and credit the rupiah Demand Deposit Accounts of the FX Swap transaction participants with BI in the equal amount to the cash value of the early redemption in rupiah. On the date of the second leg settlement of FX Swap, Bank Indonesia debits the Demand Deposit Accounts of the FX Swap transaction participants in the amount of the cash value in rupiah and transfer foreign currency to the accounts of the participants of FX Swap transaction with correspondent bank in the amount of the nominal amount of foreign currency of FX Swap. In the event that on the date of the second leg settlement, the FX Swap transaction participants do not have adequate funds in rupiah to fulfill the settlement obligation, the participants must pay an amount in the nominal value of the transaction on the subsequent business day. For delayed fulfillment of such settlement obligation, the FX Swap transaction participants are subject to sanctions in the form of written reprimand and financial penalty.

This Bank Indonesia Circular Letter comes into effect on June 8, 2012

Lampiran Attachments

Lampiran 1 Bank Indonesia Circular Letter No. 14/18/DPM

Lampiran 2 FAQ Bank Indonesia Circular Letter No. 14/18/DPM

Lampiran 3 Appendix

Lampiran 4

Lampiran 5

Lampiran 6

Lampiran 7

Lampiran 8

Lampiran 9

Lampiran 10

Kontak Contact

Kontak Legal Information Division, Ph. : (021) 2310108 ext : 8737, 7993, 4838

Halaman ini terakhir diperbarui 1/27/2021 9:15 PM

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