Amendment to Financial Services Authority Regulation Number 23/POJK.04/2016 on Collective Investment Contracts in the Form of Mutual Funds

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 2/POJK.04/2020
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 23/POJK.04/2016 CONCERNING COLLECTIVE INVESTMENT CONTRACTS IN THE FORM OF MUTUAL FUNDS BY THE GRACE OF GOD THE ALMIGHTY, THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that strategic policy is needed in an effort to increase protection for Mutual Fund investors and to increase the independence and professionalism of Investment Managers in managing Mutual Funds; b. that regulations related to risk management diversification of Securities in the investment portfolio of mutual funds in Financial Services Authority Regulation Number 23/POJK.04/2016 concerning Collective Investment Contracts in the Form of Mutual Funds are no longer in line with efforts to increase protection for Mutual Fund investors, so they need to be amended;
c. that based on the considerations as referred to in letter a, it is necessary to establish a Financial Services Authority Regulation concerning Amendment to Financial Services Authority Regulation Number 23/POJK.04/2016 concerning Collective Investment Contracts in the Form of Mutual Funds;
Recalling:

1. Law Number 8 of 1995 concerning the Capital Market (State Gazette of the Republic of Indonesia Year 1995 Number 64, Supplement to the State Gazette of the Republic of Indonesia Number 3608);
2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
3. Financial Services Authority Regulation Number 23/POJK.04/2016 concerning Collective Investment Contracts in the Form of Mutual Funds (State Gazette of the Republic of Indonesia Year 2016 Number 109, Supplement to the State Gazette of the Republic of Indonesia Number 5886);
   DECIDING:
   Establishing: AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 23/POJK.04/2016 CONCERNING COLLECTIVE INVESTMENT CONTRACTS IN THE FORM OF MUTUAL FUNDS.

Article I
Several provisions in Financial Services Authority Regulation Number 23/POJK.04/2016 concerning Collective Investment Contracts in the Form of Mutual Funds (State Gazette of the Republic of Indonesia Year 2016 Number 109, Supplement to the State Gazette of the Republic of Indonesia Number 5886) are amended as follows:

1. The provision of paragraph (2) of Article 5 is amended and 1 (one) paragraph is added, namely paragraph (4), so that Article 5 reads as follows:

Article 5
(1) Mutual Fund investments in the form of Collective Investment Contracts can only consist of:
a. Securities offered through a Public Offering and/or traded on Stock Exchanges both domestically and abroad; b. Securities issued and/or guaranteed by the Government of the Republic of Indonesia, and/or Securities issued by international institutions where the Government of the Republic of Indonesia is one of its members;
c. Debt-type Securities or Sharia Fixed-income Securities offered not through a Public Offering and have received a rating from a Securities Rating Agency;
d. Asset-backed Securities offered not through a Public Offering and have received a rating from a Securities Rating Agency; e. Domestic money market Securities that have a maturity of not more than 1 (one) year, both in Rupiah and in foreign currency; f. Participation Units of Real Estate Investment Funds in the form of Collective Investment Contracts offered not through a Public Offering; g. Derivative Securities; and/or h. Other Securities determined by the Financial Services Authority.

(2) Debt-type Securities or Sharia Fixed-income Securities offered not through a Public Offering as referred to in paragraph (1) letter c must meet the following criteria:
a. issued by:

1. Issuers or Public Companies;
2. Subsidiaries of Issuers or Public Companies that receive full guarantees from such Issuers or Public Companies;
3. State-Owned Enterprises or subsidiaries of State-Owned Enterprises;
4. The Government of the Republic of Indonesia;
5. Regional Governments; and/or
6. Financial Service Institutions that have obtained business licenses or are under the supervision of the Financial Services Authority and have experience in conducting public offerings, both of shares and bonds;
   b. have an investment-grade rating of at least idAA or equivalent at all times;
   c. are rated periodically at least 1 (one) time in 1 (one) year;
   d. rating information on Debt-type Securities or Sharia Fixed-income Securities offered not through a Public Offering has been announced to the public and/or can be accessed by Securities Price Assessment Institutions; e. are supervised by trustees registered with the Financial Services Authority during the implementation of the issuance agreement for Debt-type Securities or Sharia Fixed-income Securities offered not through a Public Offering; and f. are included in Collective Custody at the Securities Custody and Settlement Institution.

(3) Derivative Securities as referred to in paragraph (1) letter g must meet the following criteria:
a. traded at:

1. Stock Exchanges; or
2. Outside Stock Exchanges, with the following provisions:
   a) the issuer (counterparty) of the derivative is a Financial Service Institution that has obtained a business license and/or is under the supervision of the Financial Services Authority and has obtained an investment-grade rating from a Securities Rating Agency; b) valuation is done daily and fairly; and c) Derivative Securities can be sold or closed out through offsetting transactions at any time at fair value; b. have a derivative underlying object basis consisting of:
3. Securities; or
4. Securities Indices, as long as they meet the following provisions:
   a) the value of the Securities Index is published daily through mass media; and b) information about the Securities Index is published and available to the public; and
   c. do not have the potential for losses greater than the initial exposure value at the time of purchase of the Derivative Securities in question;

(4) Mutual Funds with the type of Money Market Mutual Funds and Protected Mutual Funds are prohibited from investing in Debt-type Securities or Sharia Fixed-income Securities offered not through a Public Offering.

2. The provision of paragraph (1) letter l of Article 6 is amended so that it reads as follows:

Article 6
(1) Investment Managers are prohibited from taking actions that can cause Mutual Funds in the form of Collective Investment Contracts to:
a. hold Securities traded on foreign Stock Exchanges whose information cannot be accessed from Indonesia through mass media or websites; b. hold Securities issued by 1 (one) Indonesian legal entity company or foreign legal entity company traded on foreign Stock Exchanges more than 5% (five percent) of the paid-up capital of the company in question or more than 10% (ten percent) of the Net Asset Value of the Mutual Fund at all times;
c. hold Equity-type Securities issued by a company that has listed its Securities on a Stock Exchange in Indonesia more than 5% (five percent) of the paid-up capital of the company in question;
d. hold Securities issued by 1 (one) Party more than 10% (ten percent) of the Net Asset Value of the Mutual Fund at all times; e. hold Derivative Securities:

1. which are traded outside Stock Exchanges with 1 (one) Financial Service Institution as referred to in Article 5 paragraph (3) letter a number 2 with an exposure value of more than 10% (ten percent) of the Net Asset Value of the Mutual Fund at all times; and
2. with a global net exposure value of more than 20% (twenty percent) of the Net Asset Value of the Mutual Fund at all times;
   f. hold Asset-backed Securities offered through a Public Offering more than 20% (twenty percent) of the Net Asset Value of the Mutual Fund at all times with the provision that each series of Asset-backed Securities does not exceed 10% (ten percent) of the Net Asset Value of the Mutual Fund at all times; g. hold Debt-type Securities, Sharia Fixed-income Securities, Asset-backed Securities, and/or Participation Units of Real Estate Investment Funds offered not through a Public Offering issued by 1 (one) Party more than 5% (five percent) of the Net Asset Value of the Mutual Fund at all times or collectively more than 15% (fifteen percent) of the Net Asset Value of the Mutual Fund at all times; h. hold Participation Units of a Real Estate Investment Fund in the form of a Collective Investment Contract offered through a Public Offering more than 20% (twenty percent) of the Net Asset Value of the Mutual Fund at all times with the provision that each Real Estate Investment Fund does not exceed 10% (ten percent) of the Net Asset Value of the Mutual Fund at all times;
   i. hold Participation Units of a Real Estate Investment Fund in the form of a Collective Investment Contract, if the Real Estate Investment Fund in the form of a Collective Investment Contract and the Mutual Fund in the form of a Collective Investment Contract are managed by the same Investment Manager;
   j. hold a Portfolio of Securities consisting of Securities issued by Parties affiliated with the Investment Manager more than 20% (twenty percent) of the Net Asset Value of the Mutual Fund at all times, except for Affiliation relationships that occur due to ownership or capital participation by the Government of the Republic of Indonesia; k. hold Securities issued by holders of Participation Units and/or Affiliated Parties of holders of Participation Units based on commitments that have been agreed upon by the Investment Manager with holders of Participation Units and/or Affiliated Parties of holders of Participation Units;
   l. purchase Securities from candidates or holders of Participation Units and/or Affiliated Parties of candidates or holders of Participation Units;
   m. engage in activities other than investment, reinvestment, or trading of Securities as referred to in this Financial Services Authority Regulation; n. engage in the sale of Securities that are not yet owned; o. engage in margin transactions; p. receive direct loans including issuing bonds or other debt-type Securities, except for short-term loans with a maximum duration of 1 (one) month in the context of fulfilling repurchase transactions and/or repayment of at most 10% (ten percent) of the value of the Mutual Fund portfolio at the time the loan occurs; q. provide direct loans, except for the purchase of bonds, other debt-type Securities, and/or depositing funds in banks; r. purchase Securities that are currently being offered in a Public Offering, if the Underwriter of the Public Offering is a Securities Company that is the Investment Manager itself or an Affiliate of the Investment Manager, except:
3. Debt-type Securities offered receive an investment-grade rating; and/or
4. there is excess buy demand for the offered Securities;
   s. engage in joint transactions or profit-sharing contracts with the Investment Manager itself or an Affiliate of the Investment Manager in question; t. purchase Asset-backed Securities, if:
5. the Asset-backed Securities and the Mutual Fund in the form of a Collective Investment Contract in question are managed by the same Investment Manager; and/or
6. the Investment Manager of the Mutual Fund in the form of a Collective Investment Contract is affiliated with the original creditor of the Asset-backed Securities, except for such Affiliation relationships that occur due to ownership or capital participation by the Government; and
   u. engage in securities sale transactions with a promise to repurchase and securities purchase transactions with a promise to resell.

(2) The prohibitions as referred to in paragraph (1) letter d do not apply to:
a. Bank Indonesia Certificates; b. Securities issued and/or guaranteed by the Government of the Republic of Indonesia; and/or
c. Securities issued by international financial institutions where the Government of the Republic of Indonesia is one of its members.

(3) The prohibitions as referred to in paragraph (1) letter g do not apply to Debt-type Securities and/or Sharia Fixed-income Securities issued by the Government of the Republic of Indonesia and/or Regional Governments.

(4) The prohibition for Mutual Funds in the form of Collective Investment Contracts to purchase Securities offered through a Public Offering from Parties affiliated with the Investment Manager as referred to in paragraph (1) letter r does not apply if the Affiliation relationship occurs due to ownership or capital participation by the Government.

Article II

1. Mutual Funds in the form of Collective Investment Contracts that have invested in Securities from candidates or holders of Participation Units and/or Affiliated Parties of candidates or holders of Participation Units must adjust to this Financial Services Authority Regulation at the latest 3 (three) years since this Financial Services Authority Regulation takes effect.
2. Protected Mutual Funds that have invested in Debt-type Securities or Sharia Fixed-income Securities offered not through a Public Offering are prohibited from adding investments in Debt-type Securities and/or Sharia Fixed-income Securities offered not through a Public Offering.
3. Protected Mutual Funds that have invested in Debt-type Securities or Sharia Fixed-income Securities offered not through a Public Offering as referred to in paragraph (2) must adjust to this Financial Services Authority Regulation at the latest 3 (three) years since this Financial Services Authority Regulation takes effect.
4. This Financial Services Authority Regulation takes effect on the date of its promulgation.

This copy is in accordance with the original
Deputy Director of Legal Consultation and
Harmonization of Banking Regulations 1
Legal Directorate 1
Legal Department signed
Wiwit Puspasari

In order for everyone to know it, order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on January 8, 2020
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO
Promulgated in Jakarta on January 9, 2020
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2020 NUMBER 6

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 2/POJK.04/2020
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 23/POJK.04/2016 CONCERNING COLLECTIVE INVESTMENT CONTRACTS IN THE FORM OF MUTUAL FUNDS

I. GENERAL
Mutual Funds have experienced significant growth in managed assets. Along with the growth of managed assets, individual investors investing in Mutual Fund products continue to increase. This must certainly be balanced with a professional level of management from Investment Managers, accompanied by good risk management related to the diversification of Securities in the investment portfolio of Mutual Funds. Considering this, it is necessary to make changes to Financial Services Authority Regulation Number 23/POJK.04/2016 concerning Collective Investment Contracts in the Form of Mutual Funds, specifically regarding regulations governing the investment of Mutual Funds in the form of Collective Investment Contracts in Debt-type Securities or Sharia Fixed-income Securities offered not through a Public Offering and in Securities from candidates or holders of Participation Units and/or Affiliated Parties of candidates or holders of Participation Units.

II. ARTICLE BY ARTICLE
Article I
It is clear enough.
Article II
It is clear enough.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6455