Regulation of the Head of the Commodity Futures Trading Regulatory Agency Number 6 of 2017 Concerning Technical Guidelines for the Implementation of Refined Crystal Sugar Trading Through the Commodity Auction Market

REGULATION OF THE HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY NUMBER 6 OF 2017 CONCERNING TECHNICAL GUIDELINES FOR THE IMPLEMENTATION OF REFINED CRYSTAL SUGAR TRADING THROUGH THE COMMODITY AUCTION MARKET

BY THE GRACE OF THE ALMIGHTY GOD,

THE HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY,

Considering: that in order to implement the provisions of Article 20 of the Minister of Trade Regulation Number 16/M-DAG/PER/3/2017 concerning Refined Crystal Sugar Trading Through the Commodity Auction Market, it is necessary to establish a Regulation of the Head of the Commodity Futures Trading Regulatory Agency concerning Technical Guidelines for the Implementation of Refined Crystal Sugar Trading Through the Commodity Auction Market;

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 by Law Number 10 of 2011 concerning Amendments to Law Number 32 of 1997 concerning Commodity Futures Trading (State Gazette of the Republic of Indonesia Year 2011 Number 79, Supplement to the State Gazette of the Republic of Indonesia Number 5232); 2. Law Number 7 of 2014 concerning Trade (State Gazette of the Republic of Indonesia Year 2014 Number 45, Supplement to the State Gazette of the Republic of Indonesia Number 5512); 3. Presidential Regulation Number 24 of 2010 concerning the Position, Duties, and Functions of State Ministries as well as the Organizational Structure, Duties, and Functions of Ministry Echelon I as amended several times, most recently by Presidential Regulation Number 135 of 2014 concerning the Seventh Amendment to Presidential Regulation Number 24 of 2010 concerning the Position, Duties, and Functions of State Ministries as well as the Organizational Structure, Duties, and Functions of Ministry Echelon I (State Gazette of the Republic of Indonesia Year 2014 Number 273); 4. Presidential Regulation Number 7 of 2015 concerning the Organization of State Ministries (State Gazette of the Republic of Indonesia Year 2015 Number 8); 5. Presidential Regulation Number 48 of 2015 concerning the Ministry of Trade (State Gazette of the Republic of Indonesia Year 2015 Number 90); 6. Minister of Trade Regulation Number 08/M-DAG/PER/2/2016 concerning the Organization and Work Structure of the Ministry of Trade (State News of the Republic of Indonesia Year 2016 Number 202); 7. Minister of Trade Regulation Number 16/M-DAG/PER/3/2017 concerning Refined Crystal Sugar Trading Through the Commodity Auction Market (State News of the Republic of Indonesia Year 2017 Number 428);

DECIDES:

To establish: A REGULATION OF THE HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY CONCERNING TECHNICAL GUIDELINES FOR THE IMPLEMENTATION OF REFINED CRYSTAL SUGAR TRADING THROUGH THE COMMODITY AUCTION MARKET.

CHAPTER I GENERAL PROVISIONS

Article 1 In this Regulation of the Head of the Agency, the following terms are defined:

1. The Commodity Futures Trading Regulatory Agency, hereinafter referred to as Bappebti, is a government agency whose main duty is to conduct supervision, regulation, oversight, and development of Commodity Futures Trading.
2. The Refined Crystal Sugar Auction Market, hereinafter referred to as the GKR Auction Market, is an organized physical market for sellers and buyers to conduct GKR transactions through an online auction system with transaction guarantees and commodity delivery.
3. The Organizer of the National GKR Auction Market, hereinafter referred to as the GKR Auction Market Organizer, is an auction market company that organizes the GKR Auction Market using the National Sugar Trading System electronically.
4. Futures Exchange is a business entity that organizes and provides systems and/or facilities for commodity trading activities based on Futures Contracts, Sharia Derivative Contracts, and/or other Derivative Contracts.
5. The Clearing and Guarantee Institution of the GKR Auction Market, hereinafter referred to as the GKR Auction Market Clearing and Guarantee Institution (LKP Pasar Lelang GKR), is a business entity that conducts registration and guarantees the settlement of transactions occurring at the GKR Auction Market.
6. Refined Crystal Sugar (Refined Sugar), hereinafter referred to as GKR, is processed sugar made from imported raw crystal sugar as raw material for production processes that meet SNI 3140.2-2011.
7. Participants of the GKR Auction Market are parties conducting buy or sell transactions at the GKR Auction Market.
8. Seller Participants of the GKR Auction Market, hereinafter referred to as Sellers, are GKR producers conducting sell transactions at the GKR Auction Market.
9. Buyer Participants of the GKR Auction Market, hereinafter referred to as Buyers, are GKR consumers using GKR as raw material for their own and/or their business group's production processes who conduct buy transactions at the GKR Auction Market.
10. Warehouse is a place managed by the Warehouse Manager to store GKR owned by the Seller, which serves as a guarantee against the risk of GKR trading execution and as the place of GKR delivery.
11. Warehouse Manager is a party appointed by the GKR Auction Market Organizer to conduct storage, guarding, management, oversight, and/or delivery of GKR.
12. Commodity Proof Document (SBK) is a document issued by the Warehouse Manager as proof of ownership of GKR stored by the Seller.
13. Transaction Guarantee is a guarantee amount that must be placed by the Seller and Buyer at the GKR Auction Market Clearing and Guarantee Institution as a guarantee for the execution of GKR transactions at the GKR Auction Market.
14. Refined Crystal Sugar Purchase Letter (SP-GKR) is a letter issued by the GKR Auction Market Organizer used as proof in the inter-regional and inter-island distribution of GKR.
15. Surveyor is a company appointed by the GKR Auction Market Organizer to conduct quality testing, verification, or technical tracing.
16. National Sugar Trading System is an integrated internet-based system using Electronic Barcodes as a facility provided by the GKR Auction Market Organizer to know the origin, transactions, and registration of GKR.
17. Electronic Barcode, hereinafter referred to as e-Barcode, is a special code containing complete and accurate information regarding the history of GKR trading, starting from the importation process of raw crystal sugar, production, sales, or distribution.

Article 2 (1) GKR may only be traded through the GKR Auction Market. (2) The trading of GKR as referred to in paragraph (1) may only be organized by the GKR Auction Market Organizer that has received a designation from the Minister. (3) GKR as referred to in paragraph (1) includes: a. GKR meeting SNI 3140.2-2011 with an ICUMSA number of no more than 45 IU; and b. GKR meeting SNI 3140.2-2011 with an ICUMSA number of no more than 80 IU. (4) In the event that the Buyer requires GKR with specific specifications and/or criteria, the Buyer through the GKR Auction Market Organizer may request a specific specification GKR auction.

Article 3 (1) Sellers and Buyers who already have an agreement or contract for GKR procurement may still execute the agreement or contract for such GKR procurement. (2) Agreements or contracts for GKR procurement as referred to in paragraph (1) must be registered with the GKR Auction Market Organizer no later than 30 (thirty) working days calculated from the date the GKR Auction Market effectively begins trading GKR.

CHAPTER II INSTITUTIONAL ARRANGEMENTS

First Section GKR Auction Market Organizer

Article 4 (1) In the implementation of GKR trading through the GKR Auction Market, the GKR Auction Market Organizer has the authority to: a. accept Sellers and Buyers as Participants of the GKR Auction Market in accordance with the requirements and procedures for acceptance as regulated in the regulations and bylaws of the GKR Auction Market Organizer; b. obtain access to information about Sellers and Buyers, which at least covers information related to licensing, identity, Importer Identification Number, Warehouse capacity, and/or installed capacity (production); c. appoint Surveyors who will conduct quality testing, verification, or technical tracing of GKR; d. appoint Warehouse Managers who will conduct storage, guarding, management, oversight, and/or delivery of GKR against the Seller's Warehouse; e. formulate regulations and bylaws; and f. form committees for membership, products, trading, and dispute resolution. (2) The Surveyor as referred to in paragraph (1) letter c and the Warehouse Manager as referred to in paragraph (1) letter d may be carried out by the same party. (3) The GKR Auction Market Organizer is obligated to: a. organize the GKR Auction Market fairly, orderly, and systematically in accordance with the regulations and bylaws of the GKR Auction Market Organizer; b. provide a trusted, open, and connected National Sugar Trading System with the Futures Exchange and the GKR Auction Market Clearing and Guarantee Institution, which has been examined by Bappebti; c. submit reports to the Head of Bappebti, copied to the Director General of Domestic Trade, the Director General of Foreign Trade, and the Director General of Consumer Protection and Business Order; e. maintain the confidentiality of transaction data related to specific specifications and/or criteria as referred to in Article 2 paragraph (4); f. provide facilities for dispute resolution; and g. comply with GKR trading provisions in accordance with applicable regulations. (4) The National Sugar Trading System as referred to in paragraph (3) letter b contains at least: a. an electronic online registration and transaction system; b. an online GKR trading system for immediate delivery (spot) transactions and/or forward delivery transactions; c. an integrated system with e-Barcode for oversight and distribution that at least records the importation of raw crystal sugar, and the production, sales, and distribution of GKR in real-time and online; and d. a reporting system related to GKR transactions.

Second Section Futures Exchange

Article 5 (1) In the implementation of GKR trading through the GKR Auction Market, the Futures Exchange has the authority to: a. obtain access to information from the GKR Auction Market Organizer about Sellers and Buyers, which at least covers information related to licensing, identity, Importer Identification Number, Warehouse capacity, and/or installed capacity (production); and b. notify the GKR Auction Market Organizer, Sellers, and Buyers of trading system (engine trading) failures through the GKR Auction Market Organizer's system. (2) The Futures Exchange is obligated to: a. provide trusted, open, and connected online trading facilities and/or systems (engine trading) with the GKR Auction Market Organizer and the GKR Auction Market Clearing and Guarantee Institution, which have been examined by Bappebti; and b. provide a trading system (engine trading) for GKR trading integrated with the e-Barcode in the National Sugar Trading System provided by the GKR Auction Market Organizer.

Third Section GKR Auction Market Clearing and Guarantee Institution

Article 6 (1) In the implementation of GKR trading through the GKR Auction Market, the GKR Auction Market Clearing and Guarantee Institution has the authority to: a. accept Participants of the GKR Auction Market who will conduct GKR trading guarantees through the GKR Auction Market in accordance with participant acceptance requirements and procedures in accordance with the regulations and bylaws of the GKR Auction Market Clearing and Guarantee Institution; b. obtain information and examine Transaction Guarantees placed by the Seller in the form of goods placed in designated Warehouses, and/or cash and/or time deposits; c. obtain information and examine Transaction Guarantees placed by the Buyer in the form of cash and/or time deposits; d. request the Warehouse Manager to release GKR from the Warehouse after financial obligations are met; and e. formulate regulations and bylaws of the GKR Auction Market Clearing and Guarantee Institution. (2) The GKR Auction Market Clearing and Guarantee Institution is obligated to: a. provide trusted, open, and connected online trading guarantee systems and/or facilities (clearing engine) with the GKR Auction Market Organizer, Futures Exchange, and Warehouse Manager, which have been examined by Bappebti; b. cooperate with Warehouse Managers designated by the GKR Auction Market Organizer; and c. cooperate with Surveyors designated by the GKR Auction Market Organizer.

Fourth Section GKR Auction Market Participants

Article 7 (1) Sellers and Buyers, before conducting GKR trading at the GKR Auction Market, must become Participants of the GKR Auction Market, which simultaneously become participants of the GKR Auction Market Clearing and Guarantee Institution. (2) Sellers as referred to in paragraph (1) must obtain production permits from the competent authority. (3) Buyers as referred to in paragraph (1) include: a. large industries, and small and medium industries that have permits from the technical supervising authority according to their competence; b. cooperatives, and small and medium enterprises that have obtained permits from the technical supervising authority according to their competence; and c. micro, small, and medium business groups.

Fifth Section Warehouse Manager

Article 8 (1) The Warehouse Manager has the authority to: a. issue Commodity Proof Documents (SBK); and b. arrange the schedule for GKR delivery. (2) The Warehouse Manager as referred to in paragraph (1) is obligated to: a. cooperate with the GKR Auction Market Organizer and the GKR Auction Market Clearing and Guarantee Institution; b. provide a trusted Warehouse management system connected to the GKR Auction Market Organizer and the GKR Auction Market Clearing and Guarantee Institution; c. conduct Warehouse management and oversight; d. ensure document completeness which at least covers information related to licensing, identity, Importer Identification Number, Warehouse capacity, and/or installed capacity (production); and e. be responsible for GKR delivery until it is placed on the Buyer's transportation mode in front of the Seller's Warehouse.

Sixth Section Surveyor

Article 9 (1) Surveyors at the GKR Auction Market are independent certified quality testing institutions not affiliated with Participants of the GKR Auction Market. (2) Surveyors are obligated to conduct verification or technical tracing in the form of quality and quantity testing of GKR to be sold at the GKR Auction Market and issue a Surveyor Report (LS) as the basis for the issuance of the Commodity Proof Document (SBK) by the Warehouse Manager. (3) Verification or technical tracing as referred to in paragraph (2) must be conducted in accordance with statutory regulations and integrated with the systems of the GKR Auction Market Organizer and the GKR Auction Market Clearing and Guarantee Institution.

CHAPTER III GKR CONTRACTS AND PRODUCTS

Article 10 Contracts traded through the GKR Auction Market consist of two types, namely: a. Immediate delivery transaction contracts (spot); and b. Forward delivery transaction contracts (forward).

Article 11 GKR products traded through the GKR Auction Market consist of two types, namely: a. Regular products, namely GKR as referred to in Article 2 paragraph (3); and b. Special products, namely GKR traded according to specific requests from Buyers as referred to in Article 2 paragraph (4).

CHAPTER IV PROCEDURES FOR GKR TRADING THROUGH THE GKR AUCTION MARKET

Article 12 (1) In the event of immediate delivery (spot) transactions, the Seller must place the Transaction Guarantee in a Warehouse designated by the GKR Auction Market Organizer. (2) The Transaction Guarantee as referred to in paragraph (1) is GKR that must first be verified by a Surveyor in accordance with GKR specifications, proven by a Surveyor Report (LS). (3) The Warehouse Manager is obligated to issue a Commodity Proof Document (SBK) as proof of the Seller's ownership of the GKR placed by the Seller in the Warehouse as referred to in paragraph (1). (4) The Seller is obligated to submit the Surveyor Report (LS) documents as referred to in paragraph (2) and the Commodity Proof Document (SBK) as referred to in paragraph (3) to the GKR Auction Market Clearing and Guarantee Institution through the GKR Auction Market Organizer. (5) In the event of forward delivery transactions, the Seller places the Transaction Guarantee in the form of GKR, and/or cash and/or time deposits with the GKR Auction Market Clearing and Guarantee Institution as a Transaction Guarantee at the GKR Auction Market. (6) In the event of immediate delivery (spot) transactions, the Buyer is obligated to place the Transaction Guarantee in the form of cash with the GKR Auction Market Clearing and Guarantee Institution as a Transaction Guarantee at the GKR Auction Market. (7) In the event of forward delivery transactions, the Buyer places the Transaction Guarantee in the form of cash and/or time deposits with the GKR Auction Market Clearing and Guarantee Institution as a Transaction Guarantee at the GKR Auction Market.

Article 13 (1) Buy and sell transactions at the GKR Auction Market are conducted using an open electronic online auction system. (2) In the event that the Seller enters a sell auction offer, the Seller enters a price offer within the range according to the upper price limit and lower price limit during the trading hours of the GKR Auction Market in accordance with the contracts traded as referred to in Article 10. (3) In the event that the Buyer makes a buy auction request, the Buyer enters a price request within the range according to the upper price limit and lower price limit during the trading hours of the GKR Auction Market in accordance with the contracts traded as referred to in Article 10. (4) The Buyer enters a buy auction request against the sell auction offer as referred to in paragraph (2) during the trading hours of the GKR Auction Market in accordance with the contracts traded as referred to in Article 10. (5) The Seller enters a sell auction offer against the buy auction request as referred to in paragraph (3) during the trading hours of the GKR Auction Market in accordance with the contracts traded as referred to in Article 10. (6) The National Sugar Trading System determines matched transactions, namely the winners of the sell and buy auctions, prioritizing the best price (price priority) and best time (time priority).

Article 14 (1) For every matched transaction as referred to in Article 13 paragraph (6), the National Sugar Trading System issues an e-Barcode. (2) The GKR Auction Market Organizer is obligated to notify the e-Barcode as referred to in paragraph (1) to the Seller and Buyer in real-time through the National Sugar Trading System. (3) The e-Barcode as referred to in paragraph (1) contains coding that includes at least: a. import code, at least containing:

1. the name of the importer; and
2. import volume; b. production code, at least containing:
3. the name of the producer; and
4. production quantity; c. sales code, at least containing:
5. the name of the Seller;
6. the name of the Buyer;
7. the quantity transacted; and
8. the price achieved. (4) Provisions regarding coding as referred to in paragraph (3) are as follows: a. e-Barcode is only inputted by Buyers in the form of cooperatives and business groups that will distribute GKR to their members; and b. e-Barcode will be formed automatically in the system for transactions conducted by end-user industries of GKR.

Article 15 (1) The GKR Auction Market Organizer issues a Refined Crystal Sugar Purchase Letter (SP-GKR) to the Buyer as proof of GKR purchase. (2) The Refined Crystal Sugar Purchase Letter (SP-GKR) as referred to in paragraph (1) can be used as a replacement for the Inter-Island GKR Trade Approval Letter (SPPAGKR) proof.

Article 16 Transaction settlement at the GKR Auction Market must be settled with GKR delivery and conducted in the following manner: a. The Buyer is obligated to settle all financial obligations to the GKR Auction Market Clearing and Guarantee Institution through the GKR Auction Market Organizer; b. after the Buyer settles all financial obligations as referred to in letter a, then:

1. the GKR Auction Market Organizer delivers the Refined Crystal Sugar Purchase Letter (SP-GKR) to the Buyer; and
2. the GKR Auction Market Clearing and Guarantee Institution issues an electronic Delivery Order (e-DO) to the Buyer to be used for GKR pickup; c. The Buyer is obligated to notify the Warehouse Manager about the GKR release/pickup schedule which at least contains:
3. the date of GKR release/pickup;
4. the identity of the recipient;
5. the volume and type of goods quality; and
6. the name of the transportation mode; d. The Warehouse Manager is obligated to deliver GKR to the Buyer in accordance with the electronic Delivery Order (e-DO) as referred to in letter b number 2; e. The GKR Auction Market Clearing and Guarantee Institution pays the settlement of GKR sales to the Seller in accordance with the GKR specifications that have been transacted.

Article 17 (1) For Sellers and Buyers who have agreements or contracts for the sale and marketing of GKR before the promulgation of Minister of Trade Regulation Number 16/M-DAG/PER/3/2017 concerning Refined Crystal Sugar Trading Through the Commodity Auction Market, are obligated to register such contracts with the GKR Auction Market Organizer through the GKR Auction Market system. (2) The GKR Auction Market Organizer is obligated to verify contracts as referred to in paragraph (1) at least covering the parties of the Seller and Buyer, quality, quantity, contract date, contract maturity, and delivery month.

Article 18 Financial obligations and transaction fee amounts are established by the GKR Auction Market Organizer through circular letters and reported to the Head of Bappebti.

Article 19 (1) Procedures for GKR trading through the GKR Auction Market are further regulated in the regulations and bylaws of the GKR Auction Market Organizer. (2) The regulations and bylaws as referred to in paragraph (1) and their amendments must obtain approval from the Head of Bappebti.

CHAPTER V DISPUTE RESOLUTION

Article 20 (1) In the event of disputes between Participants of the GKR Auction Market in the implementation of GKR trading, dispute resolution is first conducted through deliberation to reach consensus through dispute resolution facilities provided by the GKR Auction Market Organizer. (2) In the event that consensus as referred to in paragraph (1) is not reached, disputing Participants of the GKR Auction Market may resolve disputes through the Commodity Futures Trading Arbitration Body (BAKTI) or the District Court.

CHAPTER VI CLOSING

Article 21 This Regulation of the Head of the Agency shall come into force on the date of its promulgation.