Financial Services Authority Regulation Number 14 of 2023 Concerning Carbon Trading Through a Carbon Exchange

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 14 OF 2023
CONCERNING
CARBON TRADING THROUGH A CARBON EXCHANGE
BY THE GRACE OF GOD ALMIGHTY
THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering: that in order to implement the provisions of Article 26 paragraph (1) of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, it is necessary to establish a Financial Services Authority Regulation concerning Carbon Trading through a Carbon Exchange; 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) as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
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) as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
3. Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
DECIDING:
Establishing: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING CARBON TRADING THROUGH A CARBON EXCHANGE.
FINANCIAL SERVICES AUTHORITY
OF THE REPUBLIC OF INDONESIA

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Greenhouse Gas, hereinafter abbreviated as GHG, is a gas contained in the atmosphere, whether natural or anthropogenic, that absorbs and re-emits infrared radiation.
2. National Registry System for Climate Change Control, hereinafter abbreviated as SRN PPI, is a web-based data and information management system regarding actions and resources for climate change mitigation, climate change adaptation, and the economic value of carbon in Indonesia.
3. Carbon Unit is proof of carbon ownership in the form of a certificate or technical approval expressed in 1 (one) ton of carbon dioxide recorded in the SRN PPI.
4. Greenhouse Gas Emission Reduction Certificate, hereinafter abbreviated as SPE-GRK, is a document serving as proof of emission reduction by businesses and/or activities that have undergone measurement, reporting, and verification, as well as recorded in the SRN PPI in the form of a registry number and/or code.
5. Technical Approval for Upper Limit of Emissions for Business Actors, hereinafter referred to as PTBAE-PU, is the determination of the upper limit of GHG emissions for business actors and/or the determination of emission quotas in a specific compliance period for each business actor.
6. Security is a negotiable instrument or investment contract, whether in conventional and digital form or other forms in accordance with technological developments, which gives the owner the right to directly or indirectly obtain economic benefits from the issuer or from a specific party based on an agreement and any derivatives over the Security, which can be transferred and/or traded in the capital market.
7. Party is an individual, legal entity, company, joint venture, association, or organized group.
8. Carbon Trading is a market-based mechanism to reduce GHG emissions through the buying and selling of Carbon Units.
9. Carbon Exchange is a system that regulates Carbon Trading and/or ownership records of Carbon Units.
10. Carbon Exchange Operator is a party that organizes and provides a Carbon Exchange.
11. Board of Directors is a limited liability company organ that has the authority and is fully responsible for the management of the limited liability company for the interests of the limited liability company, in accordance with the purpose and objectives of the limited liability company and represents the limited liability company, both inside and outside the court in accordance with the provisions of the articles of association.
12. Board of Commissioners is a limited liability company organ tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors.

Article 2
The Financial Services Authority regulates, licenses, supervises, and develops Carbon Trading through a Carbon Exchange.

Article 3
(1) Carbon Units are Securities.
(2) Carbon Units traded on a Carbon Exchange must first be registered in:
a. SRN PPI; and b. the Carbon Exchange Operator.
(3) The Carbon Exchange Operator may facilitate the trading of Carbon Units from abroad that are recorded in the SRN PPI or carbon units not recorded in the SRN PPI, provided they do not conflict with statutory regulations. (4) Carbon units from abroad not recorded in the SRN PPI as referred to in paragraph (3) must meet the requirements:
a. have been registered, validated, and verified by an institution accredited by an international registration system provider; b. meet the requirements to be traded on a foreign Carbon Exchange; and
c. other requirements established by the Financial Services Authority.
(5) The Financial Services Authority establishes other requirements as referred to in paragraph (4) letter c after coordinating with the minister in charge of environmental and forestry affairs.

CHAPTER II
REQUIREMENTS FOR CARBON TRADING THROUGH A CARBON EXCHANGE
Section One
Business Activities
Article 4
(1) Parties eligible to conduct business activities as a Carbon Exchange are market organizers who have a business license as a Carbon Exchange Operator.
(2) The business license as referred to in paragraph (1) is applied for by the applicant to the Financial Services Authority.

Article 5
Carbon Units traded at the Carbon Exchange Operator consist of:
a. PTBAE-PU; and b. SPE-GRK.

Article 6
(1) The Carbon Exchange Operator may conduct other activities after obtaining approval from the Financial Services Authority.
(2) The Carbon Exchange Operator may develop products based on Carbon Units after obtaining approval from the Financial Services Authority.

Section Two
Organization of Carbon Trading through a Carbon Exchange
Article 7
(1) The Carbon Exchange Operator is required to organize the trading of Carbon Units in an orderly, fair, and efficient manner.
(2) The Carbon Exchange Operator is required to organize, provide, and use an electronic system to continuously match Carbon Unit transactions.
(3) The execution of Carbon Unit transactions as referred to in paragraph (2) may be carried out directly between Parties and/or through the intermediation of service users. (4) The Carbon Exchange Operator may enter into agreements with other Parties regarding the implementation of customer due diligence and/or the creation of a single unique identity number for service users. (5) The Carbon Exchange Operator is required to provide a Carbon Unit trading system that includes:
a. the meeting of Carbon Unit buy and sell offers; and b. the settlement of Carbon Unit transactions, both funds and Carbon Units, between Parties in the same sector and/or in different sectors in accordance with statutory regulations. (6) The settlement of Carbon Unit transactions may be carried out using a clearing mechanism with or without guarantee.

Article 8
(1) For the settlement of Carbon Unit transactions, both funds and Carbon Units, the Carbon Exchange Operator is required to ensure risk management, as well as the sufficiency of funds and Carbon Units from Parties intending to conduct Carbon Unit transactions. (2) The Carbon Exchange Operator may enter into agreements with other Parties regarding the settlement of Carbon Unit transactions, both funds and Carbon Units, as referred to in paragraph (1).

Article 9
The Carbon Exchange Operator is prohibited from being a Party conducting transactions for its own interests within the system it organizes.

Article 10
The development of Carbon Unit trading infrastructure as referred to in Article 7 and Article 8 is carried out in coordination between the Carbon Exchange Operator and the Financial Services Authority with the relevant ministry.

Article 11
The Carbon Exchange Operator is a limited liability company with legal domicile in the territory of Indonesia.

Article 12
The regulation of the utilization of state revenue from carbon trading is implemented based on provisions established by the government.

Section Three
Capital of the Carbon Exchange Operator
Article 13
(1) The Carbon Exchange Operator is required to have paid-up capital of at least IDR 100,000,000,000.00 (one hundred billion rupiah).
(2) The paid-up capital as referred to in paragraph (1) is prohibited from originating from loans.

CHAPTER III
SHAREHOLDERS, BOARD OF DIRECTORS MEMBERS, AND BOARD OF COMMISSIONERS MEMBERS OF THE CARBON EXCHANGE OPERATOR
Article 14
(1) Shares of the Carbon Exchange Operator may only be owned by sui generis institutions, Indonesian citizens, Indonesian legal entities, and/or foreign legal entities that have obtained a license or are under the supervision of a financial services regulator in their home country. (2) Foreign legal entities as referred to in paragraph (1) may own shares of the Carbon Exchange Operator directly or indirectly up to a maximum of 20% (twenty percent) of all shares with voting rights, either individually or collectively. (3) Shareholders of the carbon exchange operator are prohibited from using nominee arrangement schemes. (4) In the event there are special rights to nominate the majority of the Board of Directors and/or Board of Commissioners members and veto rights against a decision or approval in the general meeting of shareholders that significantly impacts the company, such rights must be held by shareholders in the form of sui generis institutions, Indonesian citizens, and/or Indonesian legal entities.

Article 15
(1) Parties eligible to become shareholders of the Carbon Exchange Operator are Parties approved by the Financial Services Authority.
(2) Shareholders of the Carbon Exchange Operator are required to meet integrity and financial feasibility requirements.
(3) In providing approval or rejection to prospective shareholders as referred to in paragraph (1), the Financial Services Authority assesses the ability and propriety of prospective shareholders of the Carbon Exchange Operator.

Article 16
(1) Members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Operator are required to meet integrity, competence, and expertise requirements. (2) Each prospective member of the Board of Directors and prospective member of the Board of Commissioners of the Carbon Exchange Operator must first pass the ability and propriety assessment conducted by the Financial Services Authority before being appointed by the general meeting of shareholders of the Carbon Exchange Operator.

Article 17
Further provisions regarding requirements and procedures for applying for approval of prospective shareholders, prospective members of the Board of Directors, or prospective members of the Board of Commissioners of the Carbon Exchange Operator are established by the Financial Services Authority.

Article 18
Members of the Board of Directors of the Carbon Exchange Operator are required to reside in Indonesia.

Article 19
(1) The Carbon Exchange Operator is required to have at least 2 (two) members of the Board of Directors.
(2) 1 (one) of the members of the Board of Directors of the Carbon Exchange Operator must be designated as the Chief Executive Director.
(3) 1 (one) of the members of the Board of Directors of the Carbon Exchange Operator must have knowledge or experience in climate change control and the carbon market. (4) Members of the Board of Directors of the Carbon Exchange Operator as referred to in paragraph (1) are prohibited from holding concurrent positions in other companies. (5) Members of the Board of Directors of the Carbon Exchange Operator as referred to in paragraph (3) are prohibited from holding concurrent positions as other members of the Board of Directors within the same Carbon Exchange Operator.

Article 20
(1) The Carbon Exchange Operator is required to have at least 2 (two) members of the Board of Commissioners.
(2) 1 (one) of the members of the Board of Commissioners of the Carbon Exchange Operator must be designated as the Chief Commissioner.

Article 21
Members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Operator are prohibited from:
a. having an affiliation relationship with other members of the Board of Directors and/or members of the Board of Commissioners at the Carbon Exchange Operator; b. owning shares or acting as a controller, directly or indirectly, at service users of the Carbon Exchange Operator;
c. conducting Carbon Unit transactions traded at the Carbon Exchange Operator; and
d. being involved in the unauthorized or illegal use of narcotics.

Article 22
Members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Operator are appointed for a term of 4 (four) years and may only be reappointed for 1 (one) additional term.

Article 23
The term of office of members of the Board of Directors or Board of Commissioners of the Carbon Exchange Operator ends if:
a. they are incapable of performing legal acts; b. they are declared bankrupt or become members of the Board of Directors or Board of Commissioners that cause a company to be declared bankrupt;
c. they are sentenced for committing a criminal offense;
d. they are permanently unable to perform duties; e. they are declared not to meet requirements by the Financial Services Authority; and/or f. they pass away.

CHAPTER IV
OPERATIONAL AND INTERNAL CONTROL OF THE CARBON EXCHANGE OPERATOR
Article 24
In carrying out its business activities, the Carbon Exchange Operator is required to:
a. provide systems and/or facilities to support the trading and supervision of Carbon Unit trading; b. provide fair, effective, and efficient services to both prospective service users and service users of the Carbon Exchange Operator without discrimination;
c. have adequate internal controls and risk management;
d. have, implement, and develop standard operating procedures needed to support business activities, at least regarding service users, trading, supervision of trading, systems, regulations, information confidentiality, and business continuity; e. administer, store, and maintain records of all service user activities and Carbon Unit trading data for at least 5 (five) years; f. make regulations regarding service users, Carbon Units traded, trading, and supervision of trading; g. supervise Carbon Unit trading activities conducted by service users; h. take specific actions regarding any indications or violations of statutory regulations related to Carbon Unit trading; and
i. provide access and support to the Financial Services Authority for supervision purposes regarding the Carbon Exchange Operator and its service users, including immediate access to transaction data.

Article 25
Regulations of the Carbon Exchange Operator as referred to in Article 24 letter f consist of:
a. service users of the Carbon Exchange Operator, at least containing:

1. requirements to become a service user;
2. procedures to become a service user;
3. rights, obligations, and/or prohibitions of service users, including the service user's obligation to report the settlement of their transactions to the Carbon Exchange Operator;
4. examinations of service users;
5. fees;
6. reports; and
7. sanctions for service users;
   b. Carbon Units traded, at least containing:
8. criteria for traded Carbon Units;
9. registration procedures for Carbon Units to be traded; and
10. fees;
    c. Carbon Unit trading, at least containing:
11. procedures for Carbon Unit trading;
12. trading hours;
13. provisions ensuring fair Carbon Unit trading at the Carbon Exchange Operator based on market mechanisms;
14. procedures for transaction settlement;
15. provisions ensuring the availability of accurate, current, rapidly disseminated, and widespread market information;
16. use of main and backup trading systems;
17. suspension of trading, continuation of trading in emergency conditions; and
18. transaction fees; and
    d. supervision of trading, at least containing:
19. trading supervision parameters, including parameters for suspending trading or service users; and
20. actions taken in the event of indications of unfair trading, including temporary suspension of trading.

CHAPTER V
SUPERVISION OF THE CARBON EXCHANGE
Article 26
(1) The Financial Services Authority supervises Carbon Trading through a Carbon Exchange.
(2) The scope of supervision as referred to in paragraph (1) includes:
a. the Carbon Exchange Operator; b. supporting infrastructure for Carbon Trading;
c. Carbon Exchange service users;
d. Carbon Unit transactions and transaction settlement; e. Carbon Trading governance; f. risk management; g. consumer protection; and h. Parties, products, and/or activities related to Carbon Trading through a Carbon Exchange.

CHAPTER VI
REQUIREMENTS AND PROCEDURES FOR LICENSING THE CARBON EXCHANGE OPERATOR
Article 27
(1) The requirements and procedures for licensing the Carbon Exchange Operator are carried out by fulfilling the principles of:
a. transparency; b. equal access for all Parties; and
c. regulation that creates equal opportunity (same regulation, same activity and same risk).
(2) Further provisions regarding requirements and procedures for licensing as referred to in paragraph (1) are established by the Financial Services Authority.

CHAPTER VII
AMENDMENTS TO REGULATIONS AND ARTICLES OF ASSOCIATION OF THE CARBON EXCHANGE OPERATOR
Article 28
(1) Regulations of the Carbon Exchange Operator and any amendments thereto take effect after obtaining approval from the Financial Services Authority.
(2) In drafting the regulations of the Carbon Exchange Operator, consultation may be conducted with stakeholders.

Article 29
Any amendment to the articles of association of the Carbon Exchange Operator must obtain approval from the Financial Services Authority before being notified or submitted to the minister in charge of law and human rights affairs for approval.

CHAPTER VIII
WORK PLAN AND ANNUAL BUDGET OF THE CARBON EXCHANGE OPERATOR
Article 30
(1) The Carbon Exchange Operator must submit its annual work plan and budget to the Financial Services Authority no later than the end of November of each reporting year. (2) The submission of the first annual work plan and budget of the Carbon Exchange Operator to the Financial Services Authority is submitted at the time of applying for the business license of the Carbon Exchange Operator. (3) The annual work plan and budget of the Carbon Exchange Operator must first obtain approval from the Financial Services Authority before taking effect.

CHAPTER IX
REPORTS OF THE CARBON EXCHANGE OPERATOR
Article 31
(1) The Carbon Exchange Operator is required to report to the Financial Services Authority:
a. monthly recapitulation reports of service user transactions, which must be submitted no later than the 5th (fifth) trading day of the following month; b. annual activity reports including annual financial reports audited by accountants registered with the Financial Services Authority, which must be submitted no later than the end of the 3rd (third) month after the date of the annual financial report;
c. approval and/or rejection of Parties applying as service users and/or changes to service users, which must be submitted no later than the next trading day;
d. changes in organizational structure and/or systems, which must be submitted no later than the next trading day; e. violations and sanctions imposed on service users, which must be submitted no later than the next trading day; f. special events, which must be submitted no later than the end of the same trading day; g. resignation of members of the Board of Directors and/or members of the Board of Commissioners, which must be submitted no later than 2 (two) working days from the date the event is known; and/or h. results of the general meeting of shareholders of the Carbon Exchange Operator no later than 2 (two) working days from the date of the general meeting of shareholders, with the provision that the notarial deed of the general meeting of shareholders of the Carbon Exchange Operator must be submitted to the Financial Services Authority no later than 2 (two) working days after the deed is received by the Carbon Exchange Operator. (2) The Carbon Exchange Operator is required to submit to the minister in charge of environmental and forestry affairs the monthly transaction recapitulation reports as referred to in paragraph (1) letter a and annual activity reports as referred to in paragraph (1) letter b. (3) The resignation of members of the Board of Directors or members of the Board of Commissioners based on the report as referred to in paragraph (1) letter g may be postponed by the Financial Services Authority if the resignation could affect the performance and operations of the Carbon Exchange Operator.

Article 32
(1) Submission of reports as referred to in Article 31 paragraph (1) and paragraph (2) is carried out through an electronic reporting system.
(2) In the event the electronic reporting system as referred to in paragraph (1) is not yet available, reports are submitted via printed documents or electronic documents.

CHAPTER X
SANCTION PROVISIONS
Article 33
(1) Any Party that violates the provisions as referred to in Article 3 paragraph (2), Article 7 paragraph (1), paragraph (2), and paragraph (5), Article 8 paragraph (1), Article 9, Article 13, Article 14 paragraph (3), Article 15 paragraph (2), Article 16, Article 18, Article 19, Article 20, Article 21, Article 24, Article 29, Article 30 paragraph (3), and Article 31 paragraph (1) and paragraph (2) shall be subject to administrative sanctions. (2) Sanctions as referred to in paragraph (1) are also imposed on Parties that cause the occurrence of violations as referred to in paragraph (1). (3) Sanctions as referred to in paragraph (1) and paragraph (2) are imposed by the Financial Services Authority. (4) Administrative sanctions as referred to in paragraph (1) consist of:
a. written warning; b. fine, 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) letter b, letter c, letter d, letter e, letter f, or letter g may be imposed with or without prior imposition of an administrative sanction in the form of a written warning as referred to in paragraph (4) letter a. (6) Administrative sanctions in the form of a fine as referred to in paragraph (4) letter b may be imposed alone or together with the imposition of administrative sanctions as referred to in paragraph (4) letter c, letter d, letter e, letter f, or letter g. (7) The procedure for imposing sanctions as referred to in paragraph (3) is carried out in accordance with statutory regulations.

Article 34
In addition to administrative sanctions as referred to in Article 33 paragraph (4), the Financial Services Authority may take specific actions against any Party that violates the provisions of this Financial Services Authority Regulation.

Article 35
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 33 paragraph (4) and specific actions as referred to in Article 34 to the public.

CHAPTER XI
CLOSING PROVISIONS
Article 36
This Financial Services Authority Regulation takes effect on the date of its promulgation.

This copy is consistent with the original
Director of Law 1
Legal Department signed
Mufli Asmawidjaja

To ensure everyone is aware, ordering the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on 2 August 2023

CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
MAHENDRA SIREGAR

Promulgated in Jakarta on 2 August 2023

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2023 NUMBER 24/OJK

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 14 OF 2023
CONCERNING
CARBON TRADING THROUGH A CARBON EXCHANGE

I. GENERAL

In the framework of controlling climate change, the Government of Indonesia has conveyed its commitments in several global forums, including implementing them in Indonesian domestic policy, namely by conveying Indonesia's commitment to greenhouse gas (GHG) emissions in 2030 of 32% to 43% compared to business as usual, participating in the signing of the Paris Agreement at the High-level Signature Ceremony for the Paris Agreement, and preparing domestic legal instruments to achieve the GHG emission targets.

Following up on Indonesia's commitments, in the framework of reducing GHG emissions through the management of carbon economic value, specifically in the context of Carbon Trading, the Government has prepared regulatory instruments related to the carbon market in:

1. Law Number 16 of 2016 concerning Ratification of the Paris Agreement to the United Nations Framework Convention On Climate Change;
2. Law Number 4 of 2023 concerning Development and Strengthening of the Financial Sector;
3. Presidential Regulation Number 98 of 2021 concerning the Implementation of Carbon Economic Value (NEK) To Achieve Nationally Determined Contribution Targets and Control of Greenhouse Gas Emissions in National Development; and
4. Minister of Environment and Forestry Regulation Number 21 of 2022 concerning the Implementation of Carbon Economic Value.

The above carbon trading legal instruments have mandated organizers of trade in the capital market sector to conduct Carbon Trading through a Carbon Exchange.

These trading organizers are required to first obtain a business license from the Financial Services Authority (OJK), so in preparing the regulatory framework for Carbon Exchange Organizers, which covers the procedures for licensing applications, governance, requirements, and supervision of Carbon Exchange Organizers as a follow-up to the mandate given to the Financial Services Authority and trading organizers in the capital market, regulatory infrastructure issued by the Financial Services Authority in a Financial Services Authority Regulation is needed. This regulation governs and serves as a guideline for the institutional and supervisory aspects of Carbon Trading through a Carbon Exchange.

The Financial Services Authority Regulation on Carbon Trading through a Carbon Exchange is expected to serve as a guideline and reference for Carbon Trading through a Carbon Exchange implemented by market organizers and as a reference for the Financial Services Authority in conducting regulation, supervision, and coordination with relevant ministries or agencies, as well as for Carbon Trading through a Carbon Exchange.

II. ARTICLE BY ARTICLE

Article 1
Is clear enough.

Article 2
Is clear enough.

Article 3
Paragraph (1)
Is clear enough.
Paragraph (2)
Letter a
A Carbon Exchange Organizer may transact Carbon Units that are registered in the registry system of Carbon Units at the technical ministry connected to the PPI National Registry (SRN PPI). Letter b Is clear enough. Paragraph (3) Trading of foreign Carbon Units may involve trading of Carbon Units conducted by foreign parties or trading of Carbon Units issued by other countries or foreign parties. Paragraph (4) Is clear enough. Paragraph (5) Is clear enough.

Article 4
Paragraph (1)
What is meant by "market organizer" is a party that organizes and provides systems and/or facilities to bring together parties conducting transactions over Securities or financial instruments in the capital market or organized financial market. Paragraph (2) Is clear enough.

Article 5
Is clear enough.

Article 6
Paragraph (1)
What is meant by "other activities" includes, among others, providing a trading platform for derivative products with underlying assets in the form of Carbon Units. Paragraph (2) Examples of Carbon Unit-based products that can be developed by Carbon Exchange Organizers include, among others, derivative products with underlying assets in the form of Carbon Units.

Article 7
Paragraph (1)
What is meant by "regular, fair, and efficient trading of Carbon Units" is a trade conducted based on clear rules and implemented consistently.
Thus, the resulting price reflects market mechanisms based on supply and demand forces.
Efficient trading of Carbon Units is reflected in the quick settlement of transactions with relatively low costs.
Paragraph (2)
What is meant by "electronic system" is a series of electronic devices and procedures that function to prepare, collect, process, analyze, store, display, announce, transmit, and/or disseminate electronic information. Electronic information is one or a collection of electronic data, including but not limited to writing, sound, images, maps, designs, photos, electronic data interchange, electronic mail, telegram, telex, telecopy or similar, letters, signs, numbers, access codes, symbols, or perforations that have been processed and have meaning or can be understood by those capable of understanding them. What is meant by "continuously" is the organization of trade that is implemented continuously throughout the period that the Carbon Units have not yet been used as a calculation for fulfilling emission reduction obligations by business actors. Paragraph (3) Is clear enough. Paragraph (4) What is meant by "Other Parties" in this paragraph includes, among others, the Depository and Clearing Institution. Paragraph (5) What is meant by "sector" is the sector as referred to in the Presidential Regulation regarding the implementation of carbon economic value for the achievement of nationally determined contribution targets and the control of GHG emissions in national development. The provision of systems is aligned with the needs for trading Carbon Units in the same sector or different sectors. Paragraph (6) Is clear enough.

Article 8
Paragraph (1)
Is clear enough.
Paragraph (2)
What is meant by "Other Parties" in this paragraph includes, among others, the Clearing and Guarantee Institution or the Depository and Clearing Institution.

Article 9
Is clear enough.

Article 10
Is clear enough.

Article 11
Is clear enough.

Article 12
Is clear enough.

Article 13
Is clear enough.

Article 14
Paragraph (1)
What is meant by "sui generis institution" is an institution formed based on legislation.
Examples include, among others, Bank Indonesia, Investment Management Institution, and Indonesia Export Financing Institution.
Paragraph (2)
Is clear enough.
Paragraph (3)
What is meant by "nominee arrangement" is an agreement and/or recognition by the Parties whereby a Party is the actual owner (beneficial) of shares registered in the name of another Party in the nominee arrangement agreement, whether or not accompanied by an agreement that the Party registered as the owner acts on behalf of and for the actual owner (beneficial). Paragraph (4) Is clear enough.

Article 15
Is clear enough.

Article 16
Paragraph (1)
Is clear enough.
Paragraph (2)
The assessment of competence and propriety is a process to assess the fulfillment of competence and propriety requirements for prospective members of the Board of Directors or prospective members of the Board of Commissioners of a Carbon Exchange Organizer.

Article 17
Is clear enough.

Article 18
Is clear enough.

Article 19
Is clear enough.

Article 20
Is clear enough.

Article 21
Letter a
What is meant by "affiliation" is:
a. family relationship due to marriage up to the second degree, both horizontally and vertically, namely the relationship of a person with:

1. husband or wife;
2. parents of husband or wife and husband or wife of children;
3. grandparents of husband or wife and husband or wife of grandchildren;
4. siblings of husband or wife along with the husband or wife of the sibling in question; or
5. husband or wife of siblings of the person in question.
   b. family relationship due to descent up to the second degree, both horizontally and vertically, namely the relationship of a person with:
6. parents and children;
7. grandparents and grandchildren; or
8. siblings of the person in question;
   c. relationship between a Party and employees, directors, or commissioners of that Party;
   d. relationship between 2 (two) or more companies where there is one or more members of the board of directors, management, board of commissioners, or supervisors who are the same; e. relationship between a company and a Party, whether directly or indirectly, in any way, controlling or being controlled by the company or that Party in determining the management and/or policy of the company or Party in question; f. relationship between 2 (two) or more companies that are controlled, whether directly or indirectly, in any way, in determining the management and/or policy of the company by the same Party; or g. relationship between a company and major shareholders, namely Parties who directly or indirectly own at least 20% (twenty percent) of shares with voting rights from that company. Letter b Is clear enough. Letter c Is clear enough. Letter d Is clear enough.

Article 22
The term of office for members of the Board of Directors and members of the Board of Commissioners of a Carbon Exchange Organizer is counted from the general meeting of shareholders appointing the members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Organizer until the closing of the annual general meeting of shareholders in the fourth year.

Article 23
Is clear enough.

Article 24
Letter a
Is clear enough.
Letter b
Services to prospective users of Carbon Exchange Organizer Services include, among others, the process to become a user of Carbon Exchange Organizer services and basic information services regarding the services and infrastructure provided by the Carbon Exchange Organizer. Services provided by the Carbon Exchange Organizer to users include, among others, services to support the trading of Carbon Units traded at the Carbon Exchange Organizer, services to handle complaints, and education and socialization to users. Letter c Is clear enough. Letter d Processes documented in standard operating procedures needed to support business activities include, among others, access to its trading system including limitations, protection of trade information of Securities conducted by users, trading of Securities conducted by employees of the Carbon Exchange Organizer for their own interests, handling of system problems, implementation of data and application back-up, business continuity plan, and system development to remain up-to-date. Letter e Notes on all user activities and Carbon Unit trading data, including user data, order activity data such as withdrawal, cancellation, and transaction data. Letter f Is clear enough. Letter g Is clear enough. Letter h Is clear enough. Letter i Is clear enough.

Article 25
Letter a
Is clear enough.
Letter b
Is clear enough.
Letter c
Number 1
Trading procedures include the submission of orders, agreements, and cancellation of transactions.
Number 2
Is clear enough.
Number 3
Is clear enough.
Number 4
Is clear enough.
Number 5
Is clear enough.
Number 6
Is clear enough.
Number 7
Is clear enough.
Number 8
Is clear enough.
Letter d
Is clear enough.

Article 26
Is clear enough.

Article 27
Is clear enough.

Article 28
Is clear enough.

Article 29
Is clear enough.

Article 30
Is clear enough.

Article 31
Paragraph (1)
Letter a
Is clear enough.
Letter b
Is clear enough.
Letter c
Is clear enough.
Letter d
Is clear enough.
Letter e
Is clear enough.
Letter f
What is meant by "special event" is an event related to trading system disruptions and trading supervision.
Letter g
Is clear enough.
Letter h
Is clear enough.
Paragraph (2)
Is clear enough.
Paragraph (3)
Is clear enough.

Article 32
Is clear enough.

Article 33
Is clear enough.

Article 34
What is meant by "certain actions" includes, among others, actions by the Financial Services Authority ordering the Carbon Exchange Organizer to improve standard operating procedures.

Article 35
Is clear enough.

Article 36
Is clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 48/OJK