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2011-12-01

Bank Indonesia Circular Letter No. 13/27/DPM on Procedures for Reverse Repo Transaction of Sovereign Sharia Securities

Bank Indonesia issued Circular Letter No. 13/27/DPM to establish procedures for conducting Sovereign Sharia Securities (SBSN) reverse repo transactions as a tool for monetary contraction. The regulation defines eligibility criteria for participating banks, including minimum funding ratios and system participation status, and mandates the use of fixed or variable rate tender auctions via the BI-SSSS system. It further details settlement obligations for both legs of the transaction and imposes financial penalties or temporary suspensions for cancellations or settlement failures.

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Sumber Data Legal Information Division, Department of Legal Affairs

12/1/2011 11:36 AM

Judul Bank Indonesia Circular Letter No. 13/27/DPM concerning Procedures for Reverse Repo Transaction of Sovereign Sharia Securities with Bank Indonesia in the Context of Sharia Open Market Operations

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Regulation :

Bank Indonesia Circular Letter No. 13/27/DPM concerning Procedures for Reverse Repo Transaction of Sovereign Sharia Securities with Bank Indonesia in the Context of Sharia Open Market Operations

Effective date :

1 December 2011

SBSN Reverse Repo Transaction shall be a transaction on the purchase of SBSN by a BUS/UUS (hereinafter referred to as Bank) from Bank Indonesia, with a sell-back condition by the Bank at an agreed price and within an agreed period. This transaction shall be conducted by Bank Indonesia in the context of reduction in the liquidity of a Bank or monetary contraction. SBSN Reverse Repo Transaction may be conducted by using Long-Term SBSN and Short-Term SBSN in every business day within a period of 1-12 months. In order to be able eligible for participating in SBSN Repo Reverse Transaction, the requirements shall be met, namely, among other things, having a minimum FDR of 80%, having active status as a participant of BI-SSSS and BI-RTGS System, not being subject to any sanction of temporary suspension of its participation in OMS activity, having a Demand Deposit Account and a Securities Account. In addition, the Bank must sign a covenant (Wa’d) to Resale SBSN In the Context of SBSN Reverse Repo Transaction along with the required supporting documents. SBSN Reverse Repo Transaction shall be conducted by using auction mechanisms through BI-SSSS, namely Fixed rate Tender or Variable Rate Tender methods. Bank Indonesia shall announce a SBSN Reverse Repo Transaction auction plan by no later than before the window time through BI-SSSS, LHBU System, and/or other facilities designated by Bank Indonesia. Banks may submit a bid for SBSN Reverse Repo Transaction directly for its own interest and/or through an Intermediary by BI-SSSS within the designated window time. Banks shall submit a bid including a nominal value of transaction for an auction using fixed rate tender method or a nominal value of transaction and SBSN Reverse Repo Transaction Margin for an auction using variable rate tender. The submission of a quantity bid by Banks and Intermediaries shall be in a minimum of Rp1,000,000,000.00 (one billion rupiah) and the remaining shall be in a multiple of Rp100,000,000.00 (one hundred million rupiah) and the bid of SBSN Reverse Repo Transaction Margin shall be submitted in a multiple of 0.01% (one per ten-thousandth). Bank Indonesia shall announce the results of SBSN Reverse Repo Transaction auction after the closing of the window time. Bank Indonesia shall conduct the first leg settlement by no later than 1 (one) business day following the announcement of the results of SBSN Reverse Repo Transaction auction and the Bank is required to have sufficient fund in a Demand Deposit Account for the first leg settlement. On the maturity date of SBSN Reverse Repo Transaction (second leg), BI-SSSS shall conduct the second leg settlement automatically as from the opening of BI-RTGS System up to the cut-off warning of BI-RTGS System and the Bank is required to have sufficient type and series of SBSN in the Securities Account for the second leg settlement. In the event that the bank fails to conduct the second leg settlement, SBSN Reverse Repo Transaction shall be treated as a purchase transaction in an outright manner by the Bank and Bank Indonesia shall not pay SBSN Reverse Repo Transaction Margin to the Bank. In the event of cancellation of SBSN Reverse Repo Transaction settlement, the Bank shall be subject to sanctions in the form of:

written reprimand, a financial penalty of 0,01% (one per ten thousandth) of the nominal value of the cancelled SBSN Repo Reverse Transaction, with the minimum amount of Rp10,000,000.00 (ten million rupiah) and the maximum amount of Rp100,000,000.00 (one hundred million rupiah); and in the event that the Bank has cancelled OMS transactions three times during a period of 6 (six) months, the Bank shall be subject to temporary suspension of its participation in OMS for 5 (five) consecutive business days.

In the event of cancellation of SBSN Repo Reverse Transaction and in the event that SBSN market price on the second leg is higher than the price of the transaction in the first leg, the Bank shall be subject to additional financial penalty in the amount of the difference between the price in the second leg transaction and the price in the first leg transaction, after being multiplied by the nominal SBSN subject to the reverse repo. This Bank Indonesia Circular Letter shall be effective on December 1, 2011.

Lampiran Attachments

Lampiran 1 Bank Indonesia Circular Letter No. 13/27/DPM

Lampiran 2 FAQ Bank Indonesia Circular Letter No. 13/27/DPM

Lampiran 3 Appendix

Lampiran 4

Lampiran 5

Lampiran 6

Lampiran 7

Lampiran 8

Lampiran 9

Lampiran 10

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

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