Amendment to the Financial Services Authority Regulation Number 25/POJK.04/2018 Concerning Securities Financing Institutions

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 27 /POJK.04/2021
CONCERNING
AMENDMENT TO THE FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 25/POJK.04/2018 CONCERNING SECURITIES FINANCING INSTITUTIONS BY THE GRACE OF GOD THE ALMIGHTY, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering: a. that based on the Financial Services Authority Regulation Number 64/POJK.03/2020 concerning Amendment to the Financial Services Authority Regulation Number 18/POJK.03/2017 concerning Reporting and Request for Information of Debtors Through the Financial Information Services System, securities financing institutions are required to become reporters of the financial information services system no later than December 31, 2021, thus requiring regulations regarding the quality of financing of securities transactions to be reported by securities financing institutions; b. that in order to optimize the role of securities financing institutions in financing securities transactions and to align the term of office of the Board of Directors and Board of Commissioners of securities financing institutions with that of the Board of Directors and Board of Commissioners of stock exchanges, clearing and guarantee institutions, and depository and settlement institutions, it is necessary to adjust regulations regarding the scope of business activities of securities financing institutions and the term of office of the Board of Directors and Board of Commissioners of securities financing institutions;
c. that based on the considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Amendment to the Financial Services Authority Regulation Number 25/POJK.04/2018 concerning Securities Financing Institutions;
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 25/POJK.04/2018 concerning Securities Financing Institutions (State Gazette of the Republic of Indonesia Year 2018 Number 241, Supplement to the State Gazette of the Republic of Indonesia Number 6272);
DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING AMENDMENT TO THE FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 25/POJK.04/2018 CONCERNING SECURITIES FINANCING INSTITUTIONS.
Article I
Several provisions in the Financial Services Authority Regulation Number 25/POJK.04/2018 concerning Securities Financing Institutions (State Gazette of the Republic of Indonesia Year 2018 Number 241, Supplement to the State Gazette of the Republic of Indonesia Number 6272) are amended as follows:

1. Point 6 of Article 1 is amended, 2 (two) points are inserted between point 7 and point 8 of Article 1, namely point 7A and point 7B, and Article 1 is added with 1 (one) point, namely point 19, so that Article 1 reads as follows:
   Article 1
   In this Financial Services Authority Regulation, the following terms are defined as:
2. Securities are securities, namely debt acknowledgment instruments, commercial paper, shares, bonds, debt certificates, units of participation in collective investment contracts, futures contracts on securities, and every derivative of securities.
3. Securities Transaction is any activity or contract in the context of acquiring, releasing, or using Securities that results in the transfer of ownership or does not result in the transfer of ownership.
4. Party is an individual, company, joint venture, association, or organized group.
5. Securities Transaction Financing is the provision of loan facilities in the form of funds and/or Securities provided in the context of Securities Transactions.
6. Securities Financing Institution which is hereinafter abbreviated as LPE is a Party that conducts business activities in Securities Transaction Financing.
7. Margin Transaction is a securities purchase transaction for the benefit of customers that is financed by the securities company.
8. Short Selling Transaction is a securities sale transaction where the Securities concerned are not owned by the seller at the time the transaction is executed.

7A. Repurchase Agreement Transaction which is hereinafter called Repo Transaction is a contract to sell or buy Securities with a promise to buy or sell back at a predetermined time and price.
7B. Securities Lending and Borrowing is the activity of lending and borrowing Securities between the Securities owner Party as the lender and another Party as the borrower.
8. Board of Directors is the organ of a limited liability company that has the authority and is fully responsible for the management of the limited liability company for the benefit of the limited liability company, in accordance with the purpose and objectives of the limited liability company and represents the limited liability company, both in and out of court in accordance with the provisions of the articles of association.
9. Board of Commissioners is the organ of the company tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors.
10. Securities Company is a Party that conducts business activities as an underwriter of Securities, securities broker, and/or investment manager.
11. Financing Collateral is Securities and/or funds handed over by the recipient of Securities Transaction Financing as collateral to the LPE to obtain Securities Transaction Financing.
12. Request for Fulfillment of Financing Collateral is the request by the LPE to the recipient of Securities Transaction Financing to hand over Securities and/or funds in order to meet the maximum limit of the value of Securities Transaction Financing provided by the LPE to the recipient of Securities Transaction Financing or the minimum limit of the value of Financing Collateral that must be met by the recipient of Securities Transaction Financing.
13. Issuer is a Party that conducts a Public Offering.
14. Public Company is a Company whose shares are owned by at least 300 (three hundred) shareholders and has paid-up capital of at least Rp3,000,000,000.00 (three billion rupiah) or a number of shareholders and paid-up capital established by Government Regulation.
15. Stock Exchange is a Party that organizes and provides systems and/or facilities to bring together buy and sell offers of Securities of other Parties with the aim of trading Securities among them.
16. Clearing and Guarantee Institution is a Party that organizes clearing and guarantee services for the settlement of exchange transactions.
17. Depository and Settlement Institution is a Party that organizes Central Custodian activities for custodian banks, Securities Companies, and other Parties.
18. Affiliation is:
a. family relationship due to marriage and descent up to the second degree, both horizontally and vertically; b. relationship between a Party with employees, directors, or commissioners of that Party;
c. relationship between 2 (two) companies where there is one or more members of the board of directors or board of commissioners that are the same;
d. relationship between a company and a Party, directly or indirectly, controlling or controlled by that company;

e. relationship between 2 (two) companies controlled, directly or indirectly, by the same Party; or f. relationship between a company and major shareholders.
19. Financial Information Services System which is hereinafter abbreviated as SLIK is an information system managed by the Financial Services Authority to support the implementation of supervisory tasks and information services in the financial sector.
2. The provision of paragraph (1) of Article 3 is amended, paragraphs (2), (3), (4), (5), (6), and (7) of Article 3 are deleted, and the explanation of paragraph (1) of Article 3 is amended as stated in the article-by-article explanation, so that Article 3 reads as follows:
Article 3
(1) LPE provides Securities Transaction Financing to:
a. Securities Companies for the settlement of Margin Transactions and/or Short Selling Transactions; and/or b. Securities Companies and/or other Parties through Repo Transactions and/or Securities Lending and Borrowing that are guaranteed or not guaranteed by the Clearing and Guarantee Institution, which is conducted through facilities provided by the Clearing and Guarantee Institution. (2) Deleted. (3) Deleted. (4) Deleted. (5) Deleted. (6) Deleted. (7) Deleted.
3. 2 (two) articles are inserted between Article 3 and Article 4, namely Article 3A and Article 3B so that they read as follows:
Article 3A
(1) Securities Companies as referred to in Article 3 paragraph (1) letter a are securities brokers that meet the provisions:
a. obtaining approval from the Stock Exchange to conduct Margin Transactions and/or Short Selling Transactions; and b. having credit information access at:

1. credit information provider institutions that have obtained a license from the Financial Services Authority; or
2. SLIK.
   (2) Securities Transaction Financing as referred to in Article 3 paragraph (1) letter a is provided based on the application of the Securities Company for each customer of the Securities Company. (3) At the time the LPE approves Securities Transaction Financing as referred to in paragraph (2), the LPE is required to open a sub-account for the Securities Company's Securities at the Depository and Settlement Institution for the benefit of the Securities Company's customers before Securities Transaction Financing is provided. (4) In the event that the Securities Company uses Securities and/or funds pledged by customers to obtain Securities Transaction Financing as referred to in Article 3 paragraph (1) letter a, the Securities Company is required to have an agreement with the customers that allows the Securities Company to use the Securities and/or funds pledged by the customers concerned. (5) Securities Companies that use Securities and/or funds pledged by customers as referred to in paragraph (4) are exempted from:
   a. the obligation to mutate customer-owned Securities for the settlement of Securities Transactions through the customer's Securities sub-account; b. the obligation to mutate customer-owned funds for the settlement of customer Securities Transactions through the customer's fund account; and/or
   c. the obligation to place customer collateral Securities in the collateral Securities sub-account.
   Article 3B
   (1) Securities Companies and/or other Parties that obtain Securities Transaction Financing through Repo Transactions as referred to in Article 3 paragraph (1) letter a are Securities Companies and/or other Parties that obtain approval or are registered as participants or users of Clearing and Guarantee Institution facilities for Repo Transactions at the Clearing and Guarantee Institution. (2) Securities Companies and/or other Parties that obtain Securities Transaction Financing through Securities Lending and Borrowing as referred to in Article 3 paragraph (1) letter b:
   a. are members of the Stock Exchange and/or other Parties that obtain approval as clearing members of the Clearing and Guarantee Institution for Securities Lending and Borrowing facilities guaranteed by the Clearing and Guarantee Institution; or b. obtain approval or are registered as participants or users of Clearing and Guarantee Institution facilities for Securities Lending and Borrowing facilities not guaranteed by the Clearing and Guarantee Institution.

4. The provision of Article 19 is amended, so that Article 19 reads as follows:
   Article 19
   (1) The term of office of the Board of Directors members of the LPE is 4 (four) years calculated from the General Meeting of Shareholders' meeting for the appointment of the Board of Directors members of the LPE until the closing of the 4th (fourth) annual General Meeting of Shareholders and can only be reappointed for 1 (one) term of office. (2) LPE Board of Directors members are prohibited from having a term of office and period of office longer than the term of office and period of office as referred to in paragraph (1). (3) An LPE Board of Directors member has fulfilled 1 (one) term of office if they have served for at least 2/3 (two-thirds) of the term of office of the LPE Board of Directors.
5. The provision of Article 20 is amended, so that Article 20 reads as follows:
   Article 20
   (1) The term of office of the Board of Commissioners members of the LPE is 4 (four) years calculated from the General Meeting of Shareholders' meeting for the appointment of the Board of Commissioners members of the LPE until the closing of the 4th (fourth) annual General Meeting of Shareholders and can only be reappointed for 1 (one) term of office. (2) LPE Board of Commissioners members are prohibited from having a term of office and period of office longer than the term of office and period of office as referred to in paragraph (1).

(3) An LPE Board of Commissioners member has fulfilled 1 (one) term of office if they have served for at least 2/3 (two-thirds) of the term of office of the LPE Board of Commissioners.
6. The provision of Article 24 is amended and the explanation of letter d of Article 24 is amended as stated in the article-by-article explanation, so that Article 24 reads as follows:
Article 24
(1) In providing Securities Transaction Financing, the LPE is required to do the following:
a. apply prudent principles and risk management in handling risks arising from Securities Transaction Financing; b. identify and verify the profile and risk of the recipient of Securities Transaction Financing and prepare the necessary risk mitigation;
c. ensure the availability of sufficient Securities and/or funds from the recipient of Securities Transaction Financing as collateral for Securities Transaction Financing;
d. have a written agreement regarding Securities Transaction Financing with the recipient of Securities Transaction Financing; e. have or use an adequate operational system to carry out Securities Transaction Financing activities; and f. become a reporter of SLIK. (2) In providing Securities Transaction Financing as referred to in paragraph (1), the LPE may become a member of a credit information provider institution that has obtained a license from the Financial Services Authority.
7. The provisions of letter f and letter h of Article 25 are amended, so that Article 25 reads as follows:
Article 25
The written agreement between the LPE and the recipient of Securities Transaction Financing as referred to in Article 24 paragraph (1) letter d is required to contain provisions regarding at least:
a. collateral valuation policy for Securities, including the type of Securities, determination of fair market value, and determination of haircut; b. the obligation of the LPE to notify the Request for Fulfillment of Financing Collateral to the recipient of Securities Transaction Financing in the event of a decrease in the fair market value of the Financing Collateral;
c. the obligation of the recipient of Securities Transaction Financing to fulfill the LPE's request regarding the Request for Fulfillment of Financing Collateral at all times;
d. the obligation of the recipient of Securities Transaction Financing to settle obligations for Securities Transaction Financing from the LPE or to substitute the Financing Collateral received by the LPE if the pledged Securities are temporarily suspended from trading or their listing is deleted from the Stock Exchange; e. the obligation of the Securities Company to settle obligations for Securities Transaction Financing in the event that the Securities Company is temporarily suspended from conducting Securities Transactions by the Financial Services Authority or the Stock Exchange, its business license is revoked by the Financial Services Authority, or its approval as a stock exchange member is revoked by the Stock Exchange, in the event that the recipient of Securities Transaction Financing is a Securities Company;

f. the right of the LPE to sell or buy Securities and/or take other actions at any time in the event that the recipient of Securities Transaction Financing does not fulfill its obligations as referred to in letter c, letter d, and/or letter e; g. the right of the LPE to request payment of the remaining debt to the recipient of Securities Transaction Financing, in the event that the funds obtained from the sale of Securities as referred to in letter f are still insufficient to cover the obligations of the recipient of Securities Transaction Financing to the LPE; h. the recipient of Securities Transaction Financing cannot choose the Securities and/or funds to be used to fulfill its obligations in the event of its failure in Securities Transaction Financing;
i. provisions regarding the duration and calculation of the interest rate of Securities Transaction Financing; and
j. dispute resolution mechanisms.
8. The provision of Article 27 is amended so that it reads as follows:
Article 27
In providing Securities Transaction Financing as referred to in Article 3 paragraph (1) letter a and Article 4 paragraph (1), the operational system as referred to in Article 24 letter e is required to meet at least the following provisions:
a. integrated with the capital market clearing and settlement system; b. calculate the maximum Securities Transaction Financing that can be provided for each recipient of Securities Transaction Financing, type of Securities, and concentration of Securities per Issuer;
c. calculate the ratio of Securities Transaction Financing;
d. conduct an automatic rejection process for applications for Securities Transaction Financing from the recipient of Securities Transaction Financing if the ratio of Securities Transaction Financing of the recipient of Securities Transaction Financing has reached the ratio of Request for Fulfillment of Financing Collateral; and e. provide automatic notification if the ratio of Request for Fulfillment of Financing Collateral has been reached and the ratio for the LPE to sell or buy Securities and/or take other actions in the event that the recipient of Securities Transaction Financing does not fulfill its obligations.
9. 1 (one) article is inserted between Article 27 and Article 28, namely Article 27A so that it reads as follows:
Article 27A
In providing Securities Transaction Financing as referred to in Article 3 paragraph (1) letter b, the operational system as referred to in Article 24 letter e is required to meet at least the following provisions:
a. integrated with the capital market clearing and settlement system; b. calculate the ratio of Securities Transaction Financing; and
c. provide automatic notification if the ratio of Request for Fulfillment of Financing Collateral has been reached and the ratio for the LPE to sell or buy Securities and/or take other actions in the event that the recipient of Securities Transaction Financing does not fulfill its obligations.
10. 1 (one) Chapter is inserted between CHAPTER V and CHAPTER VI, namely CHAPTER VA with Article 29A, Article 29B, Article 29C, Article 29D, Article 29E, Article 29F, and Article 29G, so that it reads as follows:

CHAPTER VA
ASSESSMENT, DETERMINATION, AND REPORTING OF THE QUALITY OF SECURITIES TRANSACTION FINANCING
Article 29A
(1) LPE is required to assess and determine the quality of Securities Transaction Financing.
(2) LPE is required to report the results of the assessment and determination of the quality of Securities Transaction Financing as referred to in paragraph (1) to the Financial Services Authority through SLIK.
Article 29B
(1) The Financial Services Authority may conduct further assessment of the quality financing assessment reported by the LPE through examination of information sources or other documents.
(2) In the event of a difference in the quality assessment of Securities Transaction Financing between the LPE and the Financial Services Authority, the quality of Securities Transaction Financing determined by the Financial Services Authority shall apply. (3) LPE is required to adjust the quality of Securities Transaction Financing in accordance with the determination of the Financial Services Authority as referred to in paragraph (2) after receiving notification from the Financial Services Authority. (4) LPE is required to report the results of the quality adjustment as referred to in paragraph (3) to the Financial Services Authority through SLIK.
Article 29C
The quality of Securities Transaction Financing includes the quality of:
a. Securities Transaction Financing for the settlement of Margin Transactions and/or Short Selling Transactions;

b. Securities Transaction Financing through Repo Transactions; and
c. Securities Transaction Financing through Securities Lending and Borrowing not guaranteed by the Clearing and Guarantee Institution.
Article 29D
(1) The assessment of the quality of Securities Transaction Financing as referred to in Article 29C is determined as:
a. performing; b. non-performing; or
c. in default.
(2) The determination of the assessment of the quality of Securities Transaction Financing as referred to in paragraph (1) is determined based on the sufficiency of Financing Collateral and the timeliness of the fulfillment of obligations of the recipient of Securities Transaction Financing arising from Securities Transaction Financing.
Article 29E
The assessment of the quality of Securities Transaction Financing as referred to in Article 29D paragraph (1) for Securities Transaction Financing for the settlement of Margin Transactions and/or Short Selling Transactions as referred to in Article 29C letter a is categorized:
a. performing if:

1. the total exposure of the recipient of Securities Transaction Financing is less than or equal to the total Financing Collateral; or
2. the total exposure of the recipient of Securities Transaction Financing is greater than the total Financing Collateral for a period of less than 5 (five) consecutive Trading Days;

b. non-performing if the total exposure of the recipient of Securities Transaction Financing is greater than the total Financing Collateral for a period of 5 (five) to 25 (twenty-five) consecutive Trading Days; and
c. in default if the total exposure of the recipient of Securities Transaction Financing is greater than the total Financing Collateral for more than 25 (twenty-five) consecutive Trading Days.
Article 29F
The assessment of the quality of Securities Transaction Financing as referred to in Article 29D paragraph (1) for Securities Transaction Financing through Repo Transactions as referred to in Article 29C letter b is categorized:
a. performing if:

1. the Repo Transaction has not yet matured; and

2. the value of the exposure of the recipient of Securities Transaction Financing is less than the value of the repo Securities;
   b. non-performing if:

3. the value of the exposure of the recipient of Securities Transaction Financing is greater than the value of the repo Securities for up to 5 (five) consecutive days; or

4. the recipient of Securities Transaction Financing fails to fulfill its obligations on the repurchase date for up to 5 (five) consecutive days after the date of failure occurs; and
   c. in default if:

5. the value of the exposure of the recipient of Securities Transaction Financing is greater than the value of the repo Securities for more than 5 (five) consecutive days; or

6. the recipient of Securities Transaction Financing fails to fulfill its obligations on the repurchase date for more than 5 (five) consecutive days after the date of failure occurs.
   Article 29G
   The assessment of the quality of Securities Transaction Financing as referred to in Article 29D paragraph (1) for Securities Transaction Financing through Securities Lending and Borrowing not guaranteed by the Clearing and Guarantee Institution as referred to in Article 29C letter c is categorized:
   a. performing if:

7. the Securities Lending and Borrowing has not yet matured; and

8. the value of the exposure of the recipient of Securities Transaction Financing is less than the value of the Financing Collateral;
   b. non-performing if:

9. the value of the exposure of the recipient of Securities Transaction Financing is greater than the value of the Financing Collateral for up to 5 (five) consecutive days; or

10. the recipient of Securities Transaction Financing fails to fulfill its obligations on the date of return of the borrowed Securities for up to 5 (five) consecutive days after the date of failure occurs; and
    c. in default if:

11. the value of the exposure of the recipient of Securities Transaction Financing is greater than the value of the Financing Collateral for more than 5 (five) consecutive days; or

12. the recipient of Securities Transaction Financing fails to fulfill its obligations on the date of return of the borrowed Securities for more than

5 (five) consecutive days after the date of such failure.

11. The Explanation of Article 30 is amended as set forth in the article-by-article explanation.

12. The provision of paragraph (1) letter c of Article 38 is amended so that Article 38 reads as follows:

Article 38
(1) LPE is required to report to the Financial Services Authority:
a. annual financial reports audited by accountants registered with the Financial Services Authority and annual activity reports signed by members of the Board of Directors and members of the Board of Commissioners of the LPE, no later than the end of the 3rd (third) month after the date of the LPE's annual financial report; b. monthly activity reports no later than on the 15th of the following month;
c. quarterly reports on the realization of work plans and budgets submitted through members of the Board of Commissioners of the LPE, with the provision that such reports present information:

1. data for the relevant quarter; and
2. data from Quarter I up to the current quarter,
   no later than on the 12th (twelfth) day after the end of the relevant quarter; d. resignation of members of the Board of Directors and/or members of the Board of Commissioners of the LPE no later than 2 (two) working days from the date the resignation letter is received by the LPE; e. results of the LPE's General Meeting of Shareholders no later than 2 (two) working days from the date of the holding of such General Meeting of Shareholders, with the provision that the notarial deed of the LPE's General Meeting of Shareholders must be submitted to the Financial Services Authority no later than 2 (two) working days after the notarial deed is received by the LPE; f. failure of the recipient of Securities Transaction Financing to fulfill obligations regarding Securities Transaction Financing no later than 1 (one) working day after the failure occurs; g. failure of the LPE to meet the maximum gearing ratio limit no later than 1 (one) working day after such occurrence; and h. reports or documents requested from time to time by the Financial Services Authority.

(2) The Financial Services Authority may postpone the resignation of members of the Board of Directors and members of the Board of Commissioners of the LPE as referred to in paragraph (1) letter d, in the event that such resignation may affect the performance and operations of the LPE.

(3) In the event that the submission deadline for reports as referred to in paragraph (1) letters a, b, and c falls on a holiday, such reports must be submitted on the next working day.

13. Between CHAPTER IX and CHAPTER X, 1 (one) CHAPTER is inserted, namely CHAPTER IXA with Article 39A so that it reads as follows:

CHAPTER IXA
OTHER PROVISIONS

Article 39A
LPE is required to adjust the tenure of members of the Board of Directors and members of the Board of Commissioners of the LPE currently serving, based on Financial Services Authority Regulation Number 25/POJK.04/2018 concerning Securities Financing Institutions, in accordance with Article 19 paragraph (1) and Article 20 paragraph (1).

14. The provision of paragraph (1) of Article 40 is amended so that Article 40 reads as follows:

Article 40
(1) Any Party that violates the provisions as referred to in Article 3A paragraph (3) and (4), Article 4 paragraph (1) and (2), Article 5 paragraph (1), Article 6, Article 7, Article 8, Article 9, Article 11, Article 12, Article 13 paragraph (1), Article 15, Article 16, Article 17, Article 18, Article 19 paragraph (2), Article 20 paragraph (2), Article 21 paragraph (1) and (2), Article 24 paragraph (1), Article 25, Article 26, Article 27, Article 27A, Article 28, Article 29, Article 29A, Article 29B paragraph (3) and (4), Article 31, Article 36 paragraph (3), Article 37 paragraph (3), Article 38 paragraph (1) and (3), and Article 39A shall be subject to administrative sanctions.

(2) Sanctions as referred to in paragraph (1) shall also be imposed on Parties who cause the violation as referred to in paragraph (1).

(3) Sanctions as referred to in paragraph (1) and paragraph (2) shall be imposed by the Financial Services Authority.

(4) Administrative sanctions as referred to in paragraph (1) consist of:
a. written warning; b. fines, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; e. revocation of business license; f. cancellation of approval; and/or g. cancellation of registration.

(5) Administrative sanctions as referred to in paragraph (4) letters b, c, d, e, f, or g may be imposed with or without prior imposition of administrative sanctions in the form of a written warning as referred to in paragraph (4) letter a.

(6) Administrative sanctions in the form of fines as referred to in paragraph (4) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (4) letters c, d, e, f, or g.

(7) The procedure for imposing sanctions as referred to in paragraph (3) shall be carried out in accordance with the provisions of applicable legislation.

Article II

1. The LPE reporting obligation via SLIK as referred to in CHAPTER VA shall commence on the date of the commencement of the LPE reporting obligation via SLIK regulated in the Financial Services Authority regulation concerning reporting and information requests for debtors via SLIK.
2. This Financial Services Authority Regulation shall commence on the date of its promulgation.

This copy is in accordance with the original
Director of Law
Legal Department signed
Mufli Asmawidjaja

To ensure that everyone knows, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on December 24, 2021
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on December 27, 2021
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2022 NUMBER 278

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 27 /POJK.04/2021
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 25/POJK.04/2018 CONCERNING SECURITIES FINANCING INSTITUTIONS

I. GENERAL
In conducting securities transaction financing, an important aspect undertaken by Securities Financing Institutions is the assessment of the risk of securities transaction financing, which can be done through access to credit or financing information provided by credit information management institutions (LPIP) or through the Financial Information Service System (SLIK) managed by the Financial Services Authority. With the obligation for Securities Financing Institutions to become reporters in SLIK, it is necessary to regulate the quality of securities transaction financing of Securities Financing Institutions to be reported via SLIK.

The existence of Securities Financing Institutions should support development initiatives in the Capital Market sector, including among others the development of the Repo Transaction market and Securities Lending and Borrowing. In synergy with these development initiatives, the scope of business activities currently conducted by Securities Financing Institutions needs to be adjusted. Adjustments are also necessary for the tenure of members of the Board of Directors and Board of Commissioners of Securities Financing Institutions, which must be aligned with the tenure of members of the Board of Directors and Board of Commissioners of stock exchanges, clearing and guarantee institutions, and depository and settlement institutions.

Based on the above background, it is necessary to adjust the regulations concerning Securities Financing Institutions.

II. ARTICLE BY ARTICLE

Article I
Number 1
Article 1
It is clear enough.

Number 2
Article 3
Paragraph (1)
Letter a
It is clear enough.

Letter b
The term "Other Parties" refers to Parties other than Securities Companies acting as sellers in Repo Transactions or recipients of Securities loans in Securities Lending and Borrowing.
Financing of Securities Transactions to Securities Companies and/or Other Parties through Repo Transactions is the provision of funds by the LPE, where the LPE acts as the buyer in the Repo Transaction. Financing of Securities Transactions to Securities Companies and/or Other Parties through Securities Lending and Borrowing is the provision of Securities by the LPE, where the LPE acts as the Party lending the Securities. The term "Facilities provided by the Clearing and Guarantee Institution for Repo Transactions" includes, among others, triparty repo facilities, which are Repo Transaction facilities where the transacting Parties agree to appoint the Clearing and Guarantee Institution to maintain and manage margins, mark-to-market, transaction settlement, and other activities related to the Repo Transaction while the Repo Transaction is still ongoing. The term "Facilities provided by the Clearing and Guarantee Institution for Securities Lending and Borrowing guaranteed by the Clearing and Guarantee Institution" includes, among others, Securities Lending and Borrowing provided by the Clearing and Guarantee Institution to clearing members to fulfill obligations arising from the buying and selling of Securities conducted on the Stock Exchange. The term "Facilities provided by the Clearing and Guarantee Institution for Securities Lending and Borrowing not guaranteed by the Clearing and Guarantee Institution" includes, among others, bilateral Securities Lending and Borrowing where the Clearing and Guarantee Institution facilitates lenders and borrowers to conduct bilateral Securities Lending and Borrowing based on agreement among the Parties.

Paragraph (2)
Deleted.

Paragraph (3)
Deleted.

Paragraph (4)
Deleted.

Paragraph (5)
Deleted.

Paragraph (6)
Deleted.

Paragraph (7)
Deleted.

Number 3
Article 3A
Paragraph (1)
It is clear enough.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
Agreements between Securities Companies and customers may be in the form of an addendum to the Securities Company's Margin Transaction or Short Selling Transaction agreements with customers.

Paragraph (5)
Letter a
The obligation to effectuate the transfer of customer-owned Securities for the settlement of Securities Transactions through customer Securities sub-accounts is carried out in accordance with implementation regulations under capital market legislation regarding internal control of Securities Companies conducting business as Securities Trading Brokers.

Letter b
The obligation to effectuate the transfer of funds for customer account holders for the settlement of Securities Transactions through customer fund accounts is carried out in accordance with implementation regulations under capital market legislation regarding internal control of Securities Companies conducting business as Securities Trading Brokers.

Letter c
The obligation to place customer collateral Securities in customer collateral Securities sub-accounts is carried out in accordance with Financial Services Authority Regulations regarding the control and protection of Securities stored by Securities Companies.

Article 3B
It is clear enough.

Number 4
Article 19
It is clear enough.

Number 5
Article 20
It is clear enough.

Number 6
Article 24
Paragraph (1)
Letter a
It is clear enough.

Letter b
In practice, the identification and verification of the profile and risk of the recipient of Securities Transaction Financing is called due diligence.

Letter c
It is clear enough.

Letter d
Written agreements regarding the financing of Securities Transactions include, among others, Securities Transaction Financing agreements for Margin Transactions, Short Selling Transactions, Securities Lending and Borrowing, Repo Transactions, and other Securities Transaction Financing agreements.

Letter e
It is clear enough.

Letter f
It is clear enough.

Paragraph (2)
It is clear enough.

Number 7
Article 25
Letter a
For Securities of an equity nature that are actively traded on the Stock Exchange, the fair market value uses the last trading price on the Stock Exchange. For Securities of an equity nature that are not actively traded on the Stock Exchange and/or not listed on the Stock Exchange, the fair market value uses the reference price set by a Securities Valuation Institution. For Securities of a debt nature, the fair market value uses the reference price set by a Securities Valuation Institution. In the event that the Securities Valuation Institution does not issue a fair market value for the aforementioned equity and debt Securities, the fair market value is determined by mutual agreement of both Parties. The term "haircut" is a factor reducing the fair market value of Securities according to its risk by a certain percentage of the fair market value of such Securities. The determination of the haircut may refer to the haircut size set by the committee at the Clearing and Guarantee Institution.

Letter b
It is clear enough.

Letter c
It is clear enough.

Letter d
It is clear enough.

Letter e
It is clear enough.

Letter f
It is clear enough.

Letter g
It is clear enough.

Letter h
It is clear enough.

Letter i
It is clear enough.

Letter j
It is clear enough.

Number 8
Article 27
It is clear enough.

Number 9
Article 27A
It is clear enough.

Number 10
Article 29A
Paragraph (1)
It is clear enough.

Paragraph (2)
Reports on the results of assessment and determination of the quality of Securities Transaction Financing via SLIK are carried out in accordance with Financial Services Authority regulations concerning reporting and information requests for debtors via SLIK.

Article 29B
Paragraph (1)
Assessments conducted by the Financial Services Authority are based on, among others, assessments and information regarding the condition of the recipient of Securities Transaction Financing.
Other information sources or documents include, among others, information sources or documents obtained from examinations or analyses of other LPE reports.

Paragraph (2)
It is clear enough.

Paragraph (3)
The determination of the quality of Securities Transaction Financing by the Financial Services Authority is carried out through a letter to the LPE.

Paragraph (4)
It is clear enough.

Article 29C
It is clear enough.

Article 29D
It is clear enough.

Article 29E
Letter a
The term "exposure of the recipient of Securities Transaction Financing" is the total outstanding financing that has been provided by the LPE to the recipient of Securities Transaction Financing from each Securities Transaction Financing for the settlement of Margin Transactions and Short Selling Transactions.

Letter b
It is clear enough.

Letter c
It is clear enough.

Article 29F
Letter a
The term "exposure value" is the total outstanding Securities Transaction Financing that has been provided by the LPE to the recipient of Securities Transaction Financing through Repo Transactions, minus the amount of funds handed over by the recipient of Securities Transaction Financing to fulfill the value of Financing Collateral in the current Repo Transaction period. The term "Repo Securities" refers to Securities handed over by the recipient of Securities Transaction Financing in Repo Transactions, including among others Securities traded, replacement Securities, and additional Securities requested by the LPE due to changes in the market price of Securities traded in the Repo Transaction.

Letter b
It is clear enough.

Letter c
It is clear enough.

Article 29G
Letter a
The term "exposure value" is the total outstanding Securities Transaction Financing that has been provided by the LPE to the recipient of Securities Transaction Financing through Securities Lending and Borrowing.

Letter b
It is clear enough.

Letter c
It is clear enough.

Number 11
Article 30
Letter a
Funds loans from financial service institutions are obtained, among others, through Repo Transactions where the LPE acts as the seller in the Repo Transaction.

Letter b
It is clear enough.

Letter c
It is clear enough.

Letter d
It is clear enough.

Letter e
Securities loans are conducted through Securities Lending and Borrowing where the LPE acts as the borrower.

Number 12
Article 38
Paragraph (1)
Letter a
Annual financial reports and annual activity reports may be submitted in the form of an annual report.

Letter b
It is clear enough.

Letter c
It is clear enough.

Letter d
It is clear enough.

Letter e
It is clear enough.

Letter f
It is clear enough.

Letter g
It is clear enough.

Letter h
It is clear enough.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Number 13
Article 39A
It is clear enough.

Number 14
Article 40
It is clear enough.

Article II
It is clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6747