FINANCIAL SERVICES AUTHORITY REGULATION

OF THE REPUBLIC OF INDONESIA

NUMBER 21 /POJK.04/2018

CONCERNING

STOCK EXCHANGE TRANSACTION SETTLEMENT TIME

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering: that in order to increase the harmonization of settlement practices in the Indonesian stock exchange with global stock exchanges, increase liquidity through the acceleration of capital investment turnover, increase the operational efficiency of stock exchanges, and reduce liquidity risks in the capital market, it is necessary to establish a Financial Services Authority Regulation concerning Stock Exchange Transaction Settlement Time;

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);

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY

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);

DECIDING:

Establishing: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING STOCK EXCHANGE TRANSACTION SETTLEMENT TIME.

CHAPTER I

GENERAL PROVISIONS

Article 1

In this Financial Services Authority Regulation, the following terms are defined as:

1. Securities are negotiable instruments, namely debt instruments, commercial paper, shares, bonds, debt certificates, Unit Participation in Collective Investment Contracts, futures contracts over Securities, and any derivatives of Securities.
2. Stock Exchange is a party that organizes and provides systems and/or facilities to bring together buy and sell offers of Securities from other parties with the aim of trading Securities among them.
3. Stock Exchange Transaction is a contract made by Stock Exchange Members in accordance with the requirements determined by the Stock Exchange regarding the sale and purchase of Securities, borrowing and lending of Securities, or other contracts regarding Securities or the price of Securities.
4. Party is an individual, company, joint venture, association, or organized group.
5. Securities Company is a Party that conducts business activities as a Securities Underwriter, Securities Broker, and/or Investment Manager.
6. Securities Broker is a Party that conducts business activities of buying and selling Securities for its own behalf or for the behalf of other Parties.
7. Separated Transaction is a Stock Exchange Transaction that is separated from the settlement guarantee of the Stock Exchange Transaction based on regulations established by the Stock Exchange and the Clearing and Guarantee Institution or by order of the Financial Services Authority.
8. Trading Day is the day when Securities trading is held at the Stock Exchange, namely Monday through Friday, unless that day is a national holiday or declared as a Stock Exchange holiday by the Stock Exchange.
9. Clearing and Guarantee Institution is a Party that organizes clearing and settlement guarantee services for Stock Exchange Transactions.
10. Custody and Settlement Institution is a Party that conducts Central Custodian activities for Custodian Banks, Securities Companies, and other Parties.

CHAPTER II

STOCK EXCHANGE TRANSACTION SETTLEMENT TIME

Article 2

(1) The Stock Exchange Transactions referred to in this Financial Services Authority Regulation are Stock Exchange Transactions in the regular market as regulated by the Stock Exchange.
(2) Settlement of Stock Exchange Transactions in the regular market is carried out on the 2nd (second) Trading Day after the day of the Stock Exchange Transaction execution (T+2).

Article 3

Regulations regarding the settlement time limit for Stock Exchange Transactions as regulated in regulations concerning guidelines for Securities Company accounting are adjusted to be on the 2nd (second) Trading Day after the day of the Stock Exchange Transaction execution (T+2).

Article 4

(1) Regulations regarding the time period as regulated in regulations concerning guidelines for the preparation of adjusted net working capital forms are adjusted, changed to be from the day of Stock Exchange Transaction execution (T+0) until the 1st (first) Trading Day after the day of Stock Exchange Transaction execution (T+1) for transactions in the regular market or other times for the negotiated market. (2) Regulations regarding the settlement time of Stock Exchange Transactions as regulated in regulations concerning guidelines for the preparation of adjusted net working capital forms are adjusted, changed to be on the 2nd (second) Trading Day after the day of Stock Exchange Transaction execution (T+2).

Article 5

The implementation of forced sale of Securities by Securities Brokers when funds show a negative balance, as regulated in regulations concerning the Explanation of Bapepam and LK Regulation Number V.D.3 concerning Internal Control of Securities Companies Conducting Business Activities as Securities Brokers, is implemented with the following provisions:

a. no later than the end of the 3rd (third) Trading Day after the Stock Exchange Transaction is conducted (T+3) or one day after the settlement date agreed upon for transactions outside the Stock Exchange, the Securities Broker is required to inform the customer regarding the negative balance position in the regular Securities account and request the customer to close the aforementioned negative balance position; and

b. if on the 4th (fourth) Trading Day after the Stock Exchange Transaction is conducted (T+4) or 2 (two) days after the settlement date agreed upon for transactions outside the Stock Exchange the customer still has not fulfilled their obligations, the Securities Broker is required to carry out the forced sale of the customer's Securities in the regular market.

Article 6

Announcement of Separated Transactions to the public and reporting of Separated Transactions to the Financial Services Authority by the Stock Exchange and the Clearing and Guarantee Institution as regulated in Article 26 paragraph (3) of Financial Services Authority Regulation Number 26/POJK.04/2014 concerning Settlement Guarantee of Stock Exchange Transactions must be carried out no later than 1 (one) Trading Day after the determination of the Separated Transaction.

Article 7

Stock Exchanges, Clearing and Guarantee Institutions, Custody and Settlement Institutions, Securities Companies, and other Parties involved in the settlement of Stock Exchange Transactions are required to make adjustments related to the settlement of Stock Exchange Transactions as fulfillment of the provisions in this Financial Services Authority Regulation.

CHAPTER III

ADMINISTRATIVE SANCTIONS

Article 8

(1) Any party that violates the provisions as referred to in Article 2 paragraph (2), Article 3, Article 4, Article 5, Article 6, Article 7, and Article 12, shall be subject to administrative sanctions.
(2) Sanctions as referred to in paragraph (1) shall also be imposed on parties who 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. 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) The procedure for imposing sanctions as referred to in paragraph (3) is carried out in accordance with the provisions of applicable legislation.
(6) 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 (1) letter a. (7) 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.

Article 9

In addition to administrative sanctions as referred to in Article 8 paragraph (4), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 10

The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 8 paragraph (4) and specific actions as referred to in Article 9 to the public.

CHAPTER IV

TRANSITIONAL PROVISIONS

Article 11

Any Stock Exchange Transaction conducted before this Financial Services Authority Regulation comes into force must be settled based on the provisions in force at the time the Stock Exchange Transaction was conducted.

CHAPTER V

CLOSING PROVISIONS

Article 12

(1) At the time this Financial Services Authority Regulation comes into force, regulations regarding:

a. the settlement time limit for Stock Exchange Transactions as referred to in regulations concerning guidelines for Securities Company accounting;

b. the time period as referred to in regulations concerning guidelines for the preparation of adjusted net working capital forms;

c. the settlement time limit for Stock Exchange Transactions as referred to in regulations concerning guidelines for the preparation of adjusted net working capital forms;

d. the implementation of information submission to customers and forced sale of Securities by Securities Brokers as referred to in regulations concerning the Explanation of Bapepam and LK Regulation Number V.D.3 concerning Internal Control of Securities Companies Conducting Business Activities as Securities Brokers;

e. the announcement of Separated Transactions to the public and reporting of Separated Transactions to the Financial Services Authority by the Stock Exchange and the Clearing and Guarantee Institution as referred to in Article 26 paragraph (3) of Financial Services Authority Regulation Number 26/POJK.04/2014 concerning Settlement Guarantee of Stock Exchange Transactions,

are repealed and declared invalid.

(2) Regulations in other legislation that regulate the settlement time limit for Stock Exchange Transactions that differ from the provisions in this Financial Services Authority Regulation, the provisions of this Financial Services Authority Regulation shall apply.

Article 13

This Financial Services Authority Regulation comes into force on the date of its promulgation.

This copy is in accordance with the original
Director of Law 1
Law Department signed
Yuliana

In order that everyone may know it, order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on November 21, 2018

CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on November 21, 2018

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

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2018 NUMBER 222

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 21 /POJK.04/2018

CONCERNING

STOCK EXCHANGE TRANSACTION SETTLEMENT TIME

I. GENERAL

Technological advancements and the development of practices applied by Stock Exchanges worldwide are directed towards transaction efficiency through the acceleration of Stock Exchange Transaction settlement. The application of a settlement cycle on the 2nd (second) Trading Day after the day of Stock Exchange Transaction execution (T+2) provides benefits to the capital market industry, namely increasing harmonization among Stock Exchanges globally, thereby facilitating cross-border Securities transactions, increasing liquidity through accelerated capital re-investment, increasing operational efficiency, and reducing liquidity risks that may occur in the capital market. In addition, one of the factors for the creation of a strong and globally competitive Indonesian capital market is the availability of Indonesian capital market trading infrastructure facilities capable of competing with capital market trading infrastructure in other countries.

To realize this, the Financial Services Authority together with Self Regulated Organizations initiated the acceleration of Stock Exchange Transaction settlement from the previous 3rd (third) Trading Day after the day of Stock Exchange Transaction execution (T+3) to the 2nd (second) Trading Day after the day of Stock Exchange Transaction execution (T+2) as part of capital market infrastructure development. Previously, the shortening of the Stock Exchange Transaction settlement cycle from the 4th (fourth) Trading Day after the day of Stock Exchange Transaction execution (T+4) to the 3rd (third) Trading Day after the day of Stock Exchange Transaction execution (T+3) had been implemented since September 9, 2002.

Currently, there are several regulations in Financial Services Authority legislation that are impacted by the acceleration of the Stock Exchange Transaction settlement time limit, including provisions regulating the recording of Stock Exchange Transactions and provisions regulating the implementation of forced sale of Securities when funds show a negative balance in the regular Securities account. Considering the above, it is necessary to establish regulations that accommodate adjustments to the Stock Exchange Transaction settlement time limit and other impacted regulations so as to support the implementation of accelerated Stock Exchange Transaction settlement.

II. ARTICLE BY ARTICLE EXPLANATION

Article 1

Clear enough.

Article 2

Clear enough.

Article 3

What is meant by "regulations concerning guidelines for Securities Company accounting" is Regulation Number VIII.G.17, appendix of the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Board Number: Kep-689/BL/2011 dated December 30, 2011 concerning Guidelines for Securities Company Accounting.

In the aforementioned regulation, regulations regarding the settlement time limit for Stock Exchange Transactions are regulated in Chapter 3 regarding Securities Broker Accounting.

Article 4

Paragraph (1)
What is meant by "regulations concerning guidelines for the preparation of adjusted net working capital forms" is Circular Letter of the Capital Market and Financial Institution Supervisory Board Number: SE-07/BL/2011 concerning Guidelines for the Preparation of Adjusted Net Working Capital Forms.

In the aforementioned regulation, regulations regarding the time period are regulated in account numbers 34, 38, 133, and 136 in the appendix.

Paragraph (2)
What is meant by "regulations concerning guidelines for the preparation of adjusted net working capital forms" is Circular Letter of the Capital Market and Financial Institution Supervisory Board Number: SE-07/BL/2011 concerning Guidelines for the Preparation of Adjusted Net Working Capital Forms.

In the aforementioned regulation, regulations regarding the settlement time of Stock Exchange Transactions are regulated in account numbers 35 and 103 in the appendix.

Article 5

What is meant by "regulations concerning the explanation of Bapepam and LK Regulation Number V.D.3 concerning Internal Control of Securities Companies Conducting Business Activities as Securities Brokers" is Circular Letter of the Capital Market and Financial Institution Supervisory Board Number: SE-16/BL/2012 concerning the Explanation of Bapepam and LK Regulation Number V.D.3 concerning Internal Control of Securities Companies Conducting Business Activities as Securities Brokers.

In the aforementioned regulation, regulations regarding the implementation of forced sale of Securities by Securities Brokers when funds show a negative balance are regulated in item 4.

Article 6

Clear enough.

Article 7

What is meant by "other Parties involved in the settlement of Stock Exchange Transactions" are custodian banks, payment banks, and back office vendors of Securities Companies.

What is meant by "adjustments" includes, among others, adjustments to regulations, operations, and systems at Stock Exchanges, Clearing and Guarantee Institutions, Custody and Settlement Institutions, Securities Companies, and other Parties involved in the settlement of Stock Exchange Transactions.

Article 8

Clear enough.

Article 9

Clear enough.

Article 10

Clear enough.

Article 11

Clear enough.

Article 12

Paragraph (1)
Letter a
What is meant by "regulations concerning guidelines for Securities Company accounting" is Regulation Number VIII.G.17, appendix of the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Board Number: Kep-689/BL/2011 dated December 30, 2011 concerning Guidelines for Securities Company Accounting.

In the aforementioned regulation, regulations regarding the settlement time limit for Stock Exchange Transactions are regulated in Chapter 3 regarding Securities Broker Accounting.

Letter b
What is meant by "regulations concerning guidelines for the preparation of adjusted net working capital forms" is Circular Letter of the Capital Market and Financial Institution Supervisory Board Number: SE-07/BL/2011 concerning Guidelines for the Preparation of Adjusted Net Working Capital Forms.

In the aforementioned regulation, regulations regarding the time period are regulated in account numbers 34, 38, 133, and 136 in the appendix.

Letter c
What is meant by "regulations concerning guidelines for the preparation of adjusted net working capital forms" is Circular Letter of the Capital Market and Financial Institution Supervisory Board Number: SE-07/BL/2011 concerning Guidelines for the Preparation of Adjusted Net Working Capital Forms.

In the aforementioned regulation, regulations regarding the settlement time of Stock Exchange Transactions are regulated in account numbers 35 and 103 in the appendix.

Letter d
What is meant by "regulations concerning the explanation of Bapepam and LK Regulation Number V.D.3 concerning Internal Control of Securities Companies Conducting Business Activities as Securities Brokers" is Circular Letter of the Capital Market and Financial Institution Supervisory Board Number: SE-16/BL/2012 concerning the Explanation of Bapepam and LK Regulation Number V.D.3 concerning Internal Control of Securities Companies Conducting Business Activities as Securities Brokers.

In the aforementioned regulation, regulations regarding the implementation of forced sale of Securities by Securities Brokers when funds show a negative balance are regulated in item 4.

Letter e
Clear enough.

Paragraph (2)
Clear enough.

Article 13

Clear enough.

Article 14

Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6262