Bappebti Regulation No. 7 of 2024 on the Second Amendment to Regulation No. 106/BAPPEBTI/PER/10/2013 Regarding Financial Reporting Obligations and Adjusted Net Capital for Futures Brokers

BAPPEBTI REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 7 OF 2024 CONCERNING THE SECOND AMENDMENT TO THE HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY REGULATION NUMBER 106/BAPPEBTI/PER/10/2013 CONCERNING FINANCIAL REPORTING OBLIGATIONS AND ADJUSTED NET CAPITAL FOR FUTURES BROKERS

BY THE GRACE OF GOD THE ALMIGHTY, HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY OF THE REPUBLIC OF INDONESIA,

Considering: a. that in view of the development of the mechanism for conducting Futures Trading, particularly in the context of conveying client mandates to foreign futures exchanges and simultaneously enhancing the financial integrity of Futures Brokers conveying client mandates to foreign futures exchanges, it is necessary to adjust the regulations governing the capital fulfillment obligations of Futures Brokers conveying client mandates to foreign futures exchanges; b. that based on the considerations referred to in letter a, it is necessary to establish a Bappebti Regulation concerning the Second Amendment to the Head of Bappebti Regulation Number 106/BAPEBTI/PER/10/2013 concerning Financial Reporting Obligations and Adjusted Net Capital for Futures Brokers;

Recalling:

1. Law Number 32 of 1997 concerning Commodity Futures Trading (State Gazette of the Republic of Indonesia Year 1997 Number 93, Supplement to the State Gazette of the Republic of Indonesia Number 3720) as amended several times, lastly with Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
2. Law Number 39 of 2008 concerning State Ministries (State Gazette of the Republic of Indonesia Year 2008 Number 166, Supplement to the State Gazette of the Republic of Indonesia 4916);
3. Government Regulation Number 49 of 2014 concerning the Conduct of Commodity Futures Trading (State Gazette of the Republic of Indonesia Year 2014 Number 143, Supplement to the State Gazette of the Republic of Indonesia Number 5548);
4. Presidential Regulation Number 11 of 2022 concerning the Ministry of Trade (State Gazette of the Republic of Indonesia Year 2022 Number 19);
5. Minister of Trade Regulation Number 29 of 2022 concerning the Organization and Work Structure of the Ministry of Trade (State News of the Republic of Indonesia Year 2022 Number 492);
6. Head of Bappebti Regulation Number 100/BAPPEBTI/PER/12/2012 concerning Guidelines for Accounting for Futures Brokers;
7. Head of Bappebti Regulation Number 106/BAPPEBTI/PER/10/2013 concerning Financial Reporting Obligations and Adjusted Net Capital for Futures Brokers as amended by Bappebti Regulation Number 6 of 2021 concerning Amendment to the Head of Bappebti Regulation Number 106/BAPPEBTI/PER/10/2013 concerning Financial Reporting Obligations and Adjusted Net Capital for Futures Brokers;

DECIDES: Establishes: BAPPEBTI REGULATION CONCERNING THE SECOND AMENDMENT TO THE HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY REGULATION NUMBER 106/BAPPEBTI/PER/10/2013 CONCERNING FINANCIAL REPORTING OBLIGATIONS AND ADJUSTED NET CAPITAL FOR FUTURES BROKERS.

Article I Several provisions in the Head of Bappebti Regulation Number 106/BAPPEBTI/PER/10/2013 concerning Financial Reporting Obligations and Adjusted Net Capital for Futures Brokers, as amended by Bappebti Regulation Number 6 of 2021 concerning Amendment to the Head of Bappebti Regulation Number 106/BAPPEBTI/PER/10/2013 concerning Financial Reporting Obligations and Adjusted Net Capital for Futures Brokers, are amended as follows:

1. The provision of paragraph (2) of Article 8 is amended, so that it reads as follows: Article 8 (1) With the implementation of this Head of Bappebti Regulation, the provisions in the Decision of the Head of Bappebti Number 47/BAPPEBTI/KP/IX/2003 concerning Minimum Financial Requirements and Financial Reporting Obligations for Futures Brokers remain valid as long as they do not conflict with this Head of Bappebti Regulation. (2) The Parties are required to adjust to the provisions in this Regulation within 6 (six) months from the date this Regulation is established.

2. Amends Appendix 2 of the Head of Bappebti Regulation Number 106/BAPPEBTI/PER/10/2013 concerning Financial Reporting Obligations and Adjusted Net Capital for Futures Brokers, as amended by Bappebti Regulation Number 6 of 2021 concerning Amendment to the Head of Bappebti Regulation Number 106/BAPPEBTI/PER/10/2013 concerning Financial Reporting Obligations and Adjusted Net Capital for Futures Brokers, so that it becomes as stated in the Appendix of this Regulation.

Article II This Regulation shall come into force on the date of establishment.

Established in Jakarta on the date 3 July 2024 ACTING HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY OF THE REPUBLIC OF INDONESIA, Signed, KASAN

Copy matches the original COMMODITY FUTURES TRADING REGULATORY AGENCY, Head of the Legal Affairs Bureau

APPENDIX BAPPEBTI REGULATION NUMBER 7 OF 2024 CONCERNING THE SECOND AMENDMENT TO BAPPEBTI HEAD REGULATION NUMBER 106/BAPPEBTI/PER/10/2013 CONCERNING FINANCIAL REPORTING OBLIGATIONS AND ADJUSTED NET CAPITAL FOR FUTURES BROKERS

PROVISIONS CONCERNING ADJUSTED NET CAPITAL, PROCEDURES FOR PREPARING ADJUSTED NET CAPITAL REPORTS, AND PROCEDURES FOR PREPARING SEPARATE ACCOUNT REPORTS

I. ADJUSTED NET CAPITAL

1. Adjusted Net Capital is the Net Capital owned by the Futures Broker minus adjustments to the Net Capital.

2. Futures Brokers are required to maintain Adjusted Net Capital at the highest value between: a. absolute value; or b. a certain percentage value of the amount of Client funds managed by them.

3. The absolute value of Adjusted Net Capital that must be maintained as referred to in number 2 (two) letter a is as follows: a. for Futures Brokers that only convey client mandates for Futures Contract transactions on domestic futures exchanges, must maintain at least an absolute Adjusted Net Capital value of Rp500,000,000.00 (five hundred million rupiah); b. for Futures Brokers that convey client mandates for Futures Contract transactions on domestic futures exchanges and convey client mandates for Futures Contract transactions on foreign futures exchanges, must maintain at least an absolute Adjusted Net Capital value of Rp1,250,000,000.00 (one billion two hundred fifty million rupiah); c. for Futures Brokers who are Participants of the Alternative Trading System, must maintain at least an absolute Adjusted Net Capital value of Rp7,500,000,000.00 (seven billion five hundred million rupiah). The absolute value of Adjusted Net Capital of Rp7,500,000,000.00 (seven billion five hundred million rupiah) includes conveying client mandates for Domestic Futures Contracts and/or Foreign Futures Contracts;

4. In the event that a Futures Broker manages Client funds exceeding the absolute value as referred to in number 3 (three), the Futures Broker is required to maintain Adjusted Net Capital at a certain percentage of the amount of Client funds managed, as referred to in number 2 (two) letter b as follows: a. Futures Brokers are required to maintain an Adjusted Net Capital value of 10% (ten percent) of the amount of Client funds managed, excluding Client funds in the context of conducting Futures Trading for conveying client mandates to foreign futures exchanges; and b. in the event that a Futures Broker has approval to convey client mandates to foreign futures exchanges, it is required to maintain additional Adjusted Net Capital of 3% (three percent) of the amount of Client funds managed in the context of conducting Futures Trading for conveying client mandates to foreign futures exchanges.

5. If Adjusted Net Capital reaches the early warning value, which is the highest between 120% (one hundred twenty percent) of: a. the absolute value stated in number 3 (three), or b. the certain percentage value stated in number 4 (four), the Futures Broker is required to report the development of its financial position to the Futures Exchange, and the Futures Exchange is required to report it to Bappebti no later than 5 (five) working days from the date the report regarding the development of the Futures Broker's financial position is received by the Futures Exchange.

6. In the event that a Futures Broker knows or finds that the Adjusted Net Capital value has reached the limit as referred to in number 2 (two), the Futures Broker is required to increase the Adjusted Net Capital within a maximum period of 5 (five) working days from the date the limit value is known by the Futures Broker and is required to report to Bappebti no later than the first working day of the following week every week for 4 (four) consecutive weeks.

7. If a Futures Broker cannot meet the financial requirements as referred to in number 6 (six), Bappebti orders the Futures Broker to immediately take the following actions: a. transfer all or part of open positions and Margin or Client accounts managed by them to other Futures Brokers; b. cease business activities of the Futures Broker, except for liquidating open positions; or c. permit the business activities of the Futures Broker based on specific requirements established by Bappebti.

II. PROCEDURES FOR PREPARING ADJUSTED NET CAPITAL REPORTS

1. In the event that a Futures Broker has positions on Futures Contracts, the calculation of Adjusted Net Capital must take into account the following: a. unrealized profits must be added to the related receivables account and unrealized losses must be deducted from the related account; and b. Futures Contracts for short positions and long positions must be valued based on their market price.

2. In these provisions, Net Capital is defined as total Current Assets adjusted minus total Liabilities;

3. Current Assets are all assets categorized as Current Assets according to the Guidelines for Accounting for Futures Brokers with adjustments as stated in number 4 (four);

4. Adjustments to Current Assets are as follows: a. do not include all advance payments, prepaid expenses, deferred expenses, loans, and receivables except:

1. receivables arising from the sale of inventory related to Commodity Futures Trading with an age not exceeding 3 (three) months from the occurrence;
2. interest receivables, commission receivables, management expense receivables in Fund Management Centers that mature in less than 30 (thirty) days, and specifically for dividends counted from the date of determination;
3. receivables from Futures Clearing Institutions and Futures Brokers who are Members of Futures Clearing Institutions arising from Futures Contract transactions, Sharia Derivative Contracts, and/or other Derivative Contracts; and
4. insurance claims for the activities of the Futures Broker's company with an age not exceeding 3 (three) months after recognition. b. do not include all receivables doubtful of collection or realization, except after deducting provisions for uncollectible or unrealized receivables; c. do not include receivables for client debit/deficit balances and affiliated clients.

5. Included in the exceptions to the adjustments as stated in number 4 (four) are loans given, advance payments, guaranteed receivables, and various other forms of receivables that have guarantees, provided they meet the following requirements: a. Loans given, advance payments, and receivables guaranteed by Securities that are truly adequate and eligible and can be immediately liquidated into cash. Loans given, advance payments, and receivables guaranteed by Securities can only be set at the market value of their guarantees after deducting a certain percentage as referred to in number 6 (six). In the event that the market value referred to is greater than the value of loans given, advance payments, and guaranteed receivables, then the value that can be counted is maximum equal to the value stated in the Financial Position Report; and b. the guarantee is under the control of the Futures Broker who has received lawful authority from the debtor to sell or convert the guarantee into cash.

6. Market risk adjustment is an adjustment to the risk of Securities owned by the Futures Broker calculated based on specific adjustments to fair value. Adjustments to Securities owned by the Futures Broker and/or guarantees for loans given, advance payments, and receivables include: a. adjustment for Bank Indonesia Certificates is 5% (five percent); b. adjustment for Government Securities with remaining maturity:

1. 0 (zero) to 7 (seven) years is 5% (five percent);
2. More than 7 (seven) years to 15 (fifteen) years is 7.5% (seven point five percent); and
3. More than 15 (fifteen) years is 10% (ten percent). c. adjustment for bonds, corporate rates, or Fixed Cash Flow Asset-Backed Securities listed on the Indonesia Stock Exchange that have:
4. rating equivalent to AAA is 5% (five percent);
5. rating equivalent to AA to less than equivalent to AAA is 15% (fifteen percent);
6. rating equivalent to A to less than equivalent to AA is 25% (twenty-five percent);
7. rating equivalent to BBB- to less than equivalent to A is 35% (thirty-five percent); and
8. rating less than equivalent to BBB- is 100% (one hundred percent). d. adjustment for Equity-type Securities in the LQ-45 category on the Indonesia Stock Exchange is 65% (sixty-five percent) and non-LQ-45 category on the Indonesia Stock Exchange is 75% (seventy-five percent), and those not listed on the Indonesia Stock Exchange (delisting) or not listed at all on the Indonesia Stock Exchange is 100% (one hundred percent); e. adjustment for Variable Cash Flow Asset-Backed Securities listed on the Indonesia Stock Exchange is 100% (one hundred percent); f. adjustment for foreign Securities is 90% (ninety percent); g. adjustment for Mutual Fund Investment Units not listed with the Financial Services Authority is 100% (one hundred percent). In the event that Mutual Fund Investment Units are listed with the Financial Services Authority, the portfolio in the Mutual Fund Investment Units is adjusted according to the market risk adjustment provisions as regulated in number 6 (six) of this article.

7. In these provisions, expenses charged as a reduction to Net Capital as referred to in number 1 are as follows: a. percentage of revaluation of securities as referred to in number 6 (six) letters a to g; b. the amount of funds needed to cover margin shortfalls (under margin) during the period when Client and affiliated client accounts have not been received as of the reporting date.

8. Futures Broker Guarantees for Contingent Liabilities. All guarantees to cover contingent liabilities will become a reduction in net capital in the calculation of Adjusted Net Capital. Contingent liabilities refer to liabilities that according to accounting regulations can be categorized as contingent liabilities.

III. PREPARATION OF FUTURES BROKER SEPARATE ACCOUNT REPORTS

This report explains all Client and Affiliated Client funds managed by the Futures Broker.

Client Funds to be Separated This section shows the total of all Client and Affiliated Client funds that should be present in the Separate Account of the Futures Broker who is a Member of the Futures Clearing Institution, the Futures Broker who is not a Member of the Futures Clearing Institution, and the Separate Account of the Futures Clearing Institution, as well as Client funds not yet deposited into the Separate Account of the Futures Broker.

1. Net balance of separate accounts: a. Cash; Cash balance in Client and Affiliated Client accounts. b. Securities/Effects. Margin in the form of Securities/Effects stored in a Bank having a custodian function at the margin storage Bank approved by Bappebti, valued according to the risk of the Effect based on adjustment from fair value.

2. Profit/loss from open positions; Profit/loss arising from open positions of Clients and Affiliated Clients.

3. Options Trading, consisting of: a. Market value of open buy Option contracts; b. Market value of open sell Option contracts. On this account, the reduction of accounts 3a and 3b is reported.

4. Client Net Wealth; Sum of account numbers 1 (one) to 3 (three).

5. Deficit Accounts; Negative client equity balance. On this account, the Futures Broker must report the deficit amount of each Client.

6. Amount to be Separated; Sum of account numbers 4 (four) and 5 (five).

Client Funds in Separate Accounts This section shows the details of the existence/placement of Client and Affiliated Client funds that must be separated so as to reflect the actual amount of funds for futures contract transactions.

7. Funds in Separate Accounts, consisting of: a. Cash and Cash Equivalents; Margin in the form of cash and cash equivalents stored in a Bank. b. Securities/Effects. Margin in the form of Securities/Effects stored in a Bank having a custodian function at the margin storage Bank approved by Bappebti, valued according to the risk of the Effect based on adjustment from fair value.

8. Margin at Futures Clearing Institutions, consisting of: a. Cash and Cash Equivalents; Margin in the form of cash and cash equivalents located at the Futures Clearing Institution for transactions. b. Securities/Effects. Margin in the form of Securities/Effects stored in a Bank having a custodian function at the margin storage Bank approved by Bappebti, valued according to the risk of the Effect based on adjustment from fair value.

9. Net settlement value of transactions from/to the Futures Clearing Institution; Net settlement value of transactions and unresolved transactions from the Futures Clearing Institution on the reporting date. Profit increases assets, while loss decreases assets.

10. Funds at Member Futures Brokers of the Clearing Institution: a. Margin;

1. Cash Margin in the form of cash and cash equivalents located at the Alternative Trading System Organizer who is a Clearing Member for transactions.
2. Securities/Effects Margin in the form of Securities/Effects stored in a Bank having a custodian function at the margin storage Bank approved by Bappebti, valued according to the risk of the Effect based on adjustment from fair value. b. Net settlement value of transactions from/to the Futures Clearing Institution. Net settlement value of transactions and unresolved transactions from the Member Futures Broker of the Clearing Institution on the reporting date.

11. Options Trading: a. Open value of sell Option contracts (short); b. Open value of buy Option contracts (long).

12. Separate Funds Not Yet Deposited to Bank; Client funds in the form of cash and cash equivalents at the Futures Broker that have not been deposited to the Bank, because the Bank facility is closed.

13. Total funds in separate accounts; Sum of account numbers 7 (seven) to 12 (twelve).

14. Excess (shortage) of funds in separate accounts. Result of subtracting account number 13 (thirteen) from number 6 (six). If there is a difference/discrepancy between the Client funds that must be separated and the Client funds in the separate account, then the difference must be explained. For Affiliated Clients, the Futures Broker is at least required to disclose the following: identity, status of affiliation relationship, amount of funds, and others.

Established in Jakarta on the date 3 July 2024 ACTING HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY OF THE REPUBLIC OF INDONESIA, Signed, KASAN

Copy matches the original COMMODITY FUTURES TRADING REGULATORY AGENCY, Head of the Legal Affairs Bureau & Legal Affairs