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2011-08-08

Bank Indonesia Circular Letter No. 13/20/DPM on Second Amendment to Open Market Operations Regulations

Bank Indonesia issued Circular Letter No. 13/20/DPM to optimize Open Market Operation instruments by introducing new provisions for foreign currency transactions on Government Securities and enhancing early redemption requirements. The regulation establishes a daily auction mechanism for foreign currency sales against rupiah, restricting participation to Foreign Exchange Banks and mandating settlement on a T+2 basis. It also imposes strict sanctions for settlement failures, including written reprimands and financial penalties calculated based on specific interest rates plus 200 basis points.

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Sumber Data Legal Information Division, Department of Legal Affairs

8/8/2011 11:22 AM

Judul Bank Indonesia Circular Letter No.13/20/DPM Dated August 8, 2011 concerning Second Amendment to BI Circular Letter No.12/18/DPM dated July 7, 2010 concerning Open Market Operations

Peraturan Bank Indonesia

Moneter dan Pasar Keuangan

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Bank Indonesia Circular Letters

Monetary

Effective

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Regulation :

BI Circular Letter No.13/20/DPM Dated August 8, 2011 concerning Second Amendment to BI Circular Letter No.12/18/DPM dated July 7, 2010 concerning Open Market Operations

Effective date :

8 August 2011

Summary :

Principally, the improvement of the provisions is conducted as an effort to optimize the use of Open Market Operation instruments to support monetary policies. The improvement includes the following matters:

The arrangement of the mechanism and procedure for foreign currency transaction on SBN. The improvement of the requirements for early redemption. The addition of new provisions on sanctions of OMO transaction in foreign exchange market.

Foreign Currency Transaction on SBN is transaction on the sale of foreign currency against rupiah by Bank Indonesia with the purchase of SBN in an outright manner by Bank Indonesia which are conducted concurrently. Several main provisions on the Foreign Currency Transaction on SBN are as follows :

Transaction shall be conducted by way of an auction through the RMDS or other facilities determined by BI within a window time as from 14.30 up to 15.00 Western Indonesia Time. Only OMO Participants constituting Foreign Exchange Banks may participate in this transaction. The participants may submit a bid both directly or through an Intermediary. Auction shall be announced by BI through the LHBU System or other facilities determined by BI. A bid may be submitted more than once (1) and each bid may only consist of 1 (one) exchange rate level. In relation to each exchange rate level, the participant may submit more than 1 (one) type and series of SBN. Bank Indonesia shall announce the results of the auction winner determination through the LHBU System and shall provide confirmation to the auction winner through the RMDS or other facilities individually. The Settlement of Foreign Currency Transaction on SBN shall be conducted on T+2. The participant is required to provide SBN in the Securities Account and transfer them to the Securities Account of BI by no later than 14.00 WIB and the participant is also required to provide sufficient rupiah funds in its Demand Deposit Account. In the event that the participant cannot fulfill the settlement obligations as referred to in letter f, the transaction shall be deemed to be cancelled and the participants shall be subject to sanctions. In the event that the participants cannot provide sufficient rupiah funds on the settlement date, the participant is required to fulfill such obligation in the subsequent business day and the participant shall be subject to sanctions for each day of delay.

Early Redemption may only be conducted on Term Deposits with a minimum tenure of 1 (one) month, namely 28 (twenty-eight) days at the time of issuance. In the event that an OMO Participant in a Foreign Currency Market fails to fulfill the obligation at the time of the settlement, the settlement shall be conducted in the subsequent business day and the OMO Participant shall be subject to sanctions in the form of:

A written reprimand in 1 (one) business day following the settlement date. A financial penalty which shall be calculated based on:

The interest rate of Fed Fund which is effective on the transaction settlement date plus 200 (two hundred) basis points, multiplied by the transaction nominal value and multiplied by 1/360 (one per three hundred and sixty) for the fulfillment of payment obligations in US Dollar currency; the interest rate issued by the central bank or monetary authority in the state of the relevant currency (official rate) which is effective on the transaction settlement date plus 200 (two hundred) basis points, multiplied by the transaction nominal value and multiplied by 1/360 (one per three hundred and sixty) for the fulfillment of the payment obligations in a foreign currency other than US Dollar; or the applicable interest rate based on Bank Indonesia policies (BI Rate) plus 200 (two hundred) basis points, multiplied by the transaction nominal value and multiplied by 1/360 (one per three hundred and sixty) for the fulfillment of the payment obligations in rupiah. BI shall debit the Demand Deposit Account or foreign currency account of the relevant OMO Participant with Bank Indonesia within 1 (one) business day following the date of the settlement of the obligation.

Lampiran Attachments

Lampiran 1 Bank Indonesia Circular Letter No.13/20/DPM

Lampiran 2 FAQ Bank Indonesia Circular Letter No.13/20/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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