Financial Services Authority Regulation Number 3/POJK.04/2020 Concerning the Conduct of Securities Companies Acting as Securities Trading Intermediaries

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 3/POJK.04/2020
CONCERNING
THE CONDUCT OF SECURITIES COMPANIES ACTING AS SECURITIES TRADING INTERMEDIARIES BY THE GRACE OF THE ALMIGHTY GOD THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that with the shift of functions, duties, and authority for the regulation and supervision of financial services activities in the capital market sector, including the conduct of securities companies acting as securities trading intermediaries, from the Capital Market Supervisory Agency and Financial Institution Supervisory Agency to the Financial Services Authority; b. that to provide clarity and certainty regarding the conduct of securities companies acting as securities trading intermediaries, existing legislation in the capital market sector regarding the conduct of securities companies acting as securities trading intermediaries, issued prior to the establishment of the Financial Services Authority, needs to be changed into a Financial Services Authority Regulation;

FINANCIAL SERVICES AUTHORITY
OF THE REPUBLIC OF INDONESIA

c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning the Conduct of Securities Companies Acting as Securities Trading Intermediaries;

Recalling:

1. Law Number 8 of 1995 concerning Capital Markets (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);

RESOLVES:
Establishing: FINANCIAL SERVICES AUTHABILITY REGULATION CONCERNING THE CONDUCT OF SECURITIES COMPANIES ACTING AS SECURITIES TRADING INTERMEDIARIES.

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

1. Securities Company is a party that conducts business activities as an underwriter of securities, securities trading intermediary, and/or investment manager.
2. Securities Trading Intermediary is a party that conducts business activities to buy and sell securities for its own behalf or for the behalf of other parties.
3. Securities are securities instruments, namely debt acknowledgment instruments, commercial paper, shares, bonds, debt certificates, Units of Participation in Collective Investment Contracts, futures contracts over Securities, and any derivatives of Securities.
4. Representative of a Securities Trading Intermediary is an individual acting on behalf of the interests of a Securities Company acting as a Securities Trading Intermediary.
5. Client is a party using the services of a Securities Trading Intermediary.

CHAPTER II
OBLIGATIONS OF SECURITIES COMPANIES ACTING AS SECURITIES TRADING INTERMEDIARIES
Article 2
A Securities Company acting as a Securities Trading Intermediary is obligated to prioritize the interests of its clients before conducting transactions for its own interests.

Article 3
(1) In providing recommendations to clients to buy or sell Securities, a Securities Company acting as a Securities Trading Intermediary is obligated to consider the financial status and investment purposes and objectives of the client. (2) In having an interest in the Securities recommended to its clients, a Securities Company acting as a Securities Trading Intermediary is obligated to inform the client of such interest before the client buys or sells the recommended Securities.

Article 4
A Securities Company acting as a Securities Trading Intermediary is obligated to first inform its clients that transactions with such clients are conducted for its own behalf or for the behalf of its affiliated parties.

Article 5
A Securities Company acting as a Securities Trading Intermediary is prohibited from using Securities and/or funds received from clients as collateral to obtain loans for the interests of the Securities Company acting as a Securities Trading Intermediary without the written approval of the relevant client.

Article 6
A Securities Company acting as a Securities Trading Intermediary is prohibited from providing:
a. recommendations to clients to buy, sell, or exchange Securities without considering the investment objectives and financial status of the client; and b. guarantees for losses suffered by clients in a Securities transaction.

Article 7
A Securities Company acting as a Securities Trading Intermediary is obligated to stamp the time, day, and date on all client orders on the order forms.

Article 8
A Securities Company acting as a Securities Trading Intermediary is obligated to provide confirmations to clients before the end of the trading day after transactions have been executed on the exchange.

Article 9
A Securities Company acting as a Securities Trading Intermediary is obligated to issue receipts after receiving Securities or funds from clients.

Article 10
Representatives of Securities Trading Intermediaries are prohibited from conducting:
a. transactions for the interests of the Securities Company acting as a Securities Trading Intermediary where the Representative of a Securities Trading Intermediary works, which are not recorded in the books of that Securities Company; and b. transactions on behalf of clients without or not in accordance with the clients' orders.

Article 11
Representatives of Securities Trading Intermediaries are obligated to provide information regarding Securities they know about to clients when requested by the relevant clients.

Article 12
Representatives of Securities Trading Intermediaries are prohibited, directly or indirectly, from receiving a share of profits from clients from a Securities transaction.

CHAPTER III
ADMINISTRATIVE SANCTIONS
Article 13
(1) Any party violating the provisions as referred to in Article 2, Article 3, Article 4, Article 5, Article 6, Article 7, Article 8, Article 9, Article 10, Article 11, and Article 12 shall be subject to administrative sanctions. (2) Sanctions as referred to in paragraph (1) shall also be imposed on parties causing the occurrence of violations 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 warnings; b. fines, namely the obligation to pay a certain amount of money;
c. business activity restrictions;
d. business activity suspension; e. business license revocation; f. approval cancellation; and/or g. registration cancellation.
(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 written warnings 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 independently or together with the imposition of sanctions as referred to in paragraph (4) letters c, d, e, f, or g. (7) The procedures for imposing administrative sanctions as referred to in paragraph (3) shall be carried out in accordance with the provisions of existing legislation.

Article 14
In addition to administrative sanctions as referred to in Article 13 paragraph (4), the Financial Services Authority may take specific actions against any party violating the provisions of this Financial Services Authority Regulation.

Article 15
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 13 paragraph (4) and specific actions as referred to in Article 14 to the public.

CHAPTER IV
CLOSING PROVISIONS
Article 16
Upon the implementation of this Financial Services Authority Regulation, the Decision of the Head of the Capital Market Supervisory Agency Number Kep-29/PM/1996 concerning the Conduct of Securities Companies Acting as Securities Trading Intermediaries, along with Regulation Number V.E.1 which is its attachment, is revoked and declared invalid.

Article 17
This Financial Services Authority Regulation shall come into force on the date of its enactment.

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

To ensure that everyone is aware, ordering the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia. Established in Jakarta on 17 February 2020 CHAIRMAN OF THE COMMISSIONERS FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC OF INDONESIA, signed WIMBOH SANTOSO

Enacted in Jakarta on 19 February 2020
MINISTER OF LAW AND HUMAN RIGHTS
OF THE REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2020 NUMBER 47

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 3/POJK.04/2020
CONCERNING
THE CONDUCT OF SECURITIES COMPANIES ACTING AS SECURITIES TRADING INTERMEDIARIES

I. GENERAL
That since December 31, 2012, the functions, duties, and authority for the regulation and supervision of financial services activities in the capital market sector, insurance, pension funds, financing institutions, and other financial service institutions have shifted from the Minister of Finance and the Capital Market Supervisory Agency and Financial Institution Supervisory Agency to the Financial Services Authority. In light of the above, it is necessary to reorganize the existing regulatory structure, particularly those related to the capital market sector, by converting Capital Market Supervisory Agency regulations related to the capital market sector into Financial Services Authority Regulations. This reorganization is conducted to ensure that there are Financial Services Authority Regulations regarding the capital market sector that are consistent with Financial Services Authority Regulations in other sectors. Based on the background and aspects mentioned above, it is necessary to replace existing legislation in the capital market sector regulating the conduct of Securities Companies acting as Securities Trading Intermediaries, namely the Decision of the Head of the Capital Market Supervisory Agency Number Kep-29/PM/1996 concerning the Conduct of Securities Companies Acting as Securities Trading Intermediaries, along with Regulation Number V.E.1 which is its attachment, into a Financial Services Authority Regulation concerning the Conduct of Securities Companies Acting as Securities Trading Intermediaries.

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.

Article 2
Sufficiently clear.

Article 3
Sufficiently clear.

Article 4
Sufficiently clear.

Article 5
Sufficiently clear.

Article 6
Sufficiently clear.

Article 7
Sufficiently clear.

Article 8
The term "trading day" refers to Monday through Friday, except when such days are national holidays or declared as exchange holidays by the exchange. Trading days end at 16:15.

Article 9
Sufficiently clear.

Article 10
Representatives of Securities Trading Intermediaries include Marketing Representatives of Securities Trading Intermediaries and Limited Marketing Representatives of Securities Trading Intermediaries.

Article 11
Sufficiently clear.

Article 12
Sufficiently clear.

Article 13
Sufficiently clear.

Article 14
The term "specific actions" includes, among others, the postponement of the extension of licenses for Representatives of Securities Trading Intermediaries.

Article 15
Sufficiently clear.

Article 16
Sufficiently clear.

Article 17
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6464