Financial Services Authority Regulation

Number 1 of 2025 regarding Financial Derivatives with Underlying Assets in the Form of Securities

Abstract:

Article 6 of Law Number 4 of 2023 regarding the Development and Strengthening of the Financial Sector (UU P2SK) mandates the assignment of regulation and supervision of Financial Derivatives to the OJK in the field of Capital Market Supervision, Carbon Exchange and Financial Derivatives, specifically Financial Derivatives with underlying domestic and foreign securities, including indices and foreign stocks.

Prior to the issuance of the UU P2SK, the regulation and supervision of Financial Derivatives other than those under OJK were also conducted under the regulation and supervision of the Commodity Futures Trading Regulatory Agency (Bappebti) as the Authority in the field of commodity futures trading, as regulated in Law Number 10 of 2011 regarding Amendments to Law Number 32 of 1997 regarding Commodity Futures Trading.

Article 312 paragraph (1) letter b of the UU P2SK mandates that the transfer of regulatory and supervisory authority over commodities that are financial instruments serving as subjects of forward contracts, Sharia derivative contracts, and/or other derivative contracts as referred to in Article 3A in Article 20 of the UU P2SK from the Commodity Futures Trading Regulatory Agency to the OJK must be completed no later than 24 months since the UU P2SK was enacted (dated January 10, 2025).

The formulation of this Financial Services Authority Regulation is carried out in the context of implementing the OJK's regulatory and supervisory authority and providing legal certainty for the continuity and development of products, market participants, and organizers of financial derivative market infrastructure that have obtained licenses from Bappebti, the regulation and supervision of which will then be conducted by the OJK by utilizing infrastructure in the field of commodity futures trading and infrastructure in the field of Capital Markets, Financial Derivatives, and Carbon Exchanges.

The legal basis for this Financial Services Authority Regulation (POJK) is:

• Law No. 8 of 1995 as amended by Law No. 4 of 2023;
• Law No. 21 of 2011 as amended by Law No. 4 of 2023; and
• Law No. 4 of 2023.

This Financial Services Authority Regulation regulates, among other things, the scope of regulation and supervision of Financial Derivatives with underlying assets in the form of Securities, Financial Derivative products, Financial Derivative market participants, the organization of Financial Derivative market infrastructure, announcements, supervision of participants and organizers of Financial Derivative infrastructure, law enforcement, reporting, and the transition of products, participants, and organizers of Financial Derivative infrastructure.

Notes:

• This Financial Services Authority Regulation takes effect on January 10, 2025.
• This Financial Services Authority Regulation was enacted on January 10, 2025, and established on January 9, 2025.
• Upon the entry into force of this Financial Services Authority Regulation, Financial Services Authority Regulation Number 32/POJK.04/2020 regarding Equity Derivative Contracts is repealed and declared invalid.