FINANCIAL SERVICES AUTHORITY

REPUBLIC OF INDONESIA

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 49 /POJK.04/2016

CONCERNING

INVESTOR PROTECTION FUND

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that with the enactment of Law Number 21 of 2011 concerning the Financial Services Authority, as of December 31, 2012, the functions, duties, and authority for the regulation and supervision of financial services activities in the Capital Market sector, including those related to the regulation of the Investor Protection Fund, have transferred from the Capital Market and Financial Institution Supervisory Agency to the Financial Services Authority; b. that in order to provide clarity and certainty regarding the regulation of the Investor Protection Fund, regulations regarding the Investor Protection Fund issued prior to the establishment of the Financial Services Authority need to be changed into a Financial Services Authority Regulation;
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 the Investor Protection Fund;

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);

DECIDING:

To establish:
FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE INVESTOR PROTECTION FUND.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Investor Assets are Securities and other assets related to Securities, and/or funds belonging to Investors deposited with a Custodian.
2. Investor Protection Fund is a collection of funds formed to protect Investors from the loss of Investor Assets, as regulated in this Financial Services Authority Regulation.
3. Investor is a client of a Securities Broker who administers the client's Securities account and a Custodian Bank.
4. Investor Protection Fund Organizer is a limited liability company that has obtained a business license from the Financial Services Authority to organize and manage the Investor Protection Fund.
5. Risk Factor is one element in determining the amount of annual membership contribution of a Custodian Bank for the Investor Protection Fund, which is the sum of risk values multiplied by the Risk Weight.

CHAPTER II

FORMATION OF THE INVESTOR PROTECTION FUND

Article 2

The Investor Protection Fund is formed and originates from the following sources:
a. initial fund contributions from the Stock Exchange, Clearing and Guarantee Institution, and Depository and Settlement Institution; b. membership contributions whose amounts are determined by the Financial Services Authority, consisting of initial membership contributions and annual membership contributions;
c. funds obtained by the Investor Protection Fund from the Custodian as compensation for Investors as the implementation of subrogation rights;
d. investment results of the Investor Protection Fund; and e. other sources determined by the Financial Services Authority.

CHAPTER III

MEMBERSHIP CONTRIBUTIONS OF THE INVESTOR PROTECTION FUND

Article 3

(1) The implementation of membership contributions for the Investor Protection Fund shall be carried out with the following provisions:
a. for Securities Brokers who administer client Securities accounts:

1. an initial membership contribution of IDR 100,000,000.00 (one hundred million Rupiah) for each Securities Broker administering client Securities accounts; and
2. an annual membership contribution of 0.001% (one per one hundred thousand) of the average monthly total value of Client Assets in the previous year deposited with the Securities Broker administering client Securities accounts.
   b. for Custodian Banks:
3. an initial membership contribution of IDR 100,000,000.00 (one hundred million Rupiah) for each Custodian Bank; and
4. an annual membership contribution of the entire Risk Factor multiplied by 0.001% (one per one hundred thousand) of the average monthly total value of Investor Assets in the previous year deposited with the Custodian Bank.

(2) Changes to the amount of initial membership contributions and annual membership contributions as referred to in paragraph (1) shall subsequently be determined by a Circular Letter of the Financial Services Authority.

CHAPTER IV

MANAGEMENT OF THE INVESTOR PROTECTION FUND

Article 4

The Investor Protection Fund is not the property of any specific Party and is not used for any purposes other than those determined in this Financial Services Authority Regulation.

Article 5

The Investor Protection Fund is administered and managed by the Investor Protection Fund Organizer.

Article 6

The Investor Protection Fund is represented by the Investor Protection Fund Organizer both inside and outside of court.

Article 7

The assets of the Investor Protection Fund cannot be lent or pledged as collateral.

Article 8

The assets of the Investor Protection Fund can only be invested in Government Securities and/or deposits in banks owned by the Government of the Republic of Indonesia.

Article 9

Investment of the Investor Protection Fund in forms other than as referred to in Article 8 can only be carried out after obtaining approval from the Financial Services Authority.

Article 10

The investment results of the Investor Protection Fund, after deducting costs for management services, must be added to the Investor Protection Fund.

Article 11

The Investor Protection Fund Organizer is entitled to receive remuneration for management services over the investment of the Investor Protection Fund in the amount of 10% (ten percent) of the net income from investment results.

Article 12

The Financial Services Authority may determine other limits on the remuneration as referred to in Article 11 by considering the needs of the Investor Protection Fund and the financial condition of the Investor Protection Fund Organizer.

Article 13

In the event that the Financial Services Authority decides that the Investor Protection Fund Organizer is unable to organize and manage the Investor Protection Fund, the organization and management of the Investor Protection Fund shall be carried out by the Financial Services Authority, with or without appointing other Parties.

Article 14

Under certain conditions other than those regulated in this Financial Services Authority Regulation, the Financial Services Authority may take over and determine the use of the Investor Protection Fund.

Article 15

Provisions regarding certain conditions and the use of the Investor Protection Fund as referred to in Article 14 are determined by the Financial Services Authority.

CHAPTER V

MEMBERSHIP OF THE INVESTOR PROTECTION FUND

Article 16

Custodians are required to become members of the Investor Protection Fund.

Article 17

Custodians as referred to in Article 16 are Securities Brokers who administer client Securities accounts and Custodian Banks.

Article 18

Members of the Investor Protection Fund are required to meet the following provisions:
a. pay in full and on time the membership contribution in the amount determined by the Financial Services Authority; b. separate Securities accounts at the Custodian for each Investor and from the Custodian's own Securities accounts;
c. separate fund accounts at banks for each Investor and from the Custodian's own fund accounts as regulated in legislation in the Capital Market sector regulating the Internal Control of Securities Companies Conducting Business Activities as Securities Brokers; and
d. have and apply a risk management system as regulated in legislation in the Capital Market sector.

CHAPTER VI

SCOPE OF PROTECTION OF THE INVESTOR PROTECTION FUND

Article 19

Investor Assets in the form of Securities and other assets related to Securities that receive protection from the Investor Protection Fund are Securities in Collective Custody at the Custodian that are recorded in Securities Accounts at the Depository and Settlement Institution.

Article 20

Investor Assets in the form of funds that receive protection from the Investor Protection Fund are funds deposited with the Custodian where a Client Fund Account is opened at a bank in the name of each respective Investor.

Article 21

Investors whose assets receive protection from the Investor Protection Fund are Investors who meet the following requirements:
a. deposit their assets and have a Securities account at the Custodian; b. have a Sub-Securities Account opened at the Depository and Settlement Institution by the Custodian; and
c. have a single investor identification number from the Depository and Settlement Institution.

Article 22

The Investor Protection Fund is used to provide compensation to Investors for the loss of Investor Assets.

Article 23

Provisions as referred to in Article 22 do not apply to Investors who meet one (1) or more of the following criteria:
a. Investors who are involved in or cause the loss of Investor Assets; b. Investors who are controlling shareholders, members of the Board of Directors, members of the Board of Commissioners, or officials one level below the Board of Directors of the Custodian; and/or
c. Investors who are Affiliates of the parties as referred to in letters a and b.

CHAPTER VII

COMPENSATION BY THE INVESTOR PROTECTION FUND

First Section

Payment of Compensation

Article 24

(1) Payment of compensation to Investors using the Investor Protection Fund is carried out if the following provisions are met:
a. the Financial Services Authority has issued a written statement that:

1. there is a loss of Investor Assets;
2. the Custodian does not have the ability to return the lost Investor Assets; and
3. for Custodians that are Securities Brokers administering Securities, it is declared that they cannot continue their business activities and their business license is considered for revocation by the Financial Services Authority; or
4. for Custodian Banks, it is declared that they cannot continue their business activities as Custodian Banks and their approval as Commercial Banks as Custodians is considered for revocation by the Financial Services Authority; and
   b. the Investor has submitted a compensation request to the Investor Protection Fund Organizer in accordance with provisions regulated in the Financial Services Authority Regulation concerning the Investor Protection Fund Organizer.

(2) Provisions regarding the procedures and criteria for the written statement as referred to in paragraph (1) letter a are determined by the Financial Services Authority.

(3) Compensation as referred to in paragraph (1) is provided in the form of funds in the amount of the value of the lost Investor Assets and/or in accordance with the highest limit for each Investor and each Custodian determined by the Financial Services Authority.

(4) Provisions regarding the procedures for determining the value of lost Investor Assets as referred to in paragraph (3) are determined by the Financial Services Authority.

Article 25

Compensation for the value of lost Investor Assets does not include the value of losses from estimated future investment values.

Second Section

Subrogation

Article 26

(1) The Investor Protection Fund replaces the position of Investors who receive compensation for the loss of Investor Assets from the Investor Protection Fund against the Custodian due to subrogation.

(2) The right of the Investor Protection Fund due to subrogation as referred to in paragraph (1) is equal to the compensation that has been provided by the Investor Protection Fund to the Investor plus the costs incurred in the framework of payment of compensation and the return of said funds.

(3) The replacement of the Investor's position by the Investor Protection Fund as referred to in paragraph (1) does not eliminate the Investor's right to sue the Custodian for the loss of Investor Assets that are not replaced by the Investor Protection Fund.

(4) In exercising subrogation rights as referred to in paragraph (1), the Investor Protection Fund is represented by the Investor Protection Fund Organizer.

(5) The implementation of subrogation rights by the Investor Protection Fund Organizer is carried out in accordance with the procedures as regulated in the Financial Services Authority Regulation concerning the Investor Protection Fund Organizer.

Third Section

Obligations of Members of the Investor Protection Fund due to Subrogation

Article 27

(1) Custodians are required to return all compensation funds that have been paid by the Investor Protection Fund plus the costs that have been incurred.

(2) The return of funds by the Custodian as referred to in paragraph (1) is carried out within a maximum period of 60 (sixty) days since the request for fund return is submitted by the Investor Protection Fund Organizer.

CHAPTER VIII

SANCTION PROVISIONS

Article 28

(1) Without prejudice to criminal provisions in the Capital Market sector, the Financial Services Authority has the authority to impose administrative sanctions on any party that violates the provisions of this Financial Services Authority Regulation, including parties that cause the violation to occur, in the form of:
a. written warnings; 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 licenses; f. cancellation of approvals; and g. cancellation of registrations.

(2) Administrative sanctions as referred to in paragraph (1) letters b, c, d, e, f, or g can be imposed with or without being preceded by the imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a.

(3) Administrative fines as referred to in paragraph (1) letter b can be imposed separately or together with the imposition of sanctions as referred to in paragraph (1) letters c, d, e, f, or g.

Article 29

In addition to administrative sanctions as referred to in Article 28 paragraph (1), the Financial Services Authority can take certain actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 30

The Financial Services Authority can announce the imposition of administrative sanctions as referred to in Article 28 paragraph (1) and certain actions as referred to in Article 29 to the public.

CHAPTER IX

TRANSITIONAL PROVISIONS

Article 31

With the implementation of this Financial Services Authority Regulation, the Investor Protection Fund formed based on Capital Market and Financial Institution Supervisory Agency Regulation Number VI.A.4 concerning the Investor Protection Fund, Appendix of the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number Kep-715/BL/2012 dated December 28, 2012, is declared to remain in existence and be managed by the Investor Protection Fund Organizer.

Article 32

At the time this Financial Services Authority Regulation comes into force, Financial Services Authority Circular Letter Number 30/SEOJK.04/2015 concerning Custodian Bank Membership Contributions for the Investor Protection Fund is declared to remain in force insofar as it does not conflict with this Financial Services Authority Regulation.

CHAPTER X

CLOSING PROVISIONS

Article 33

At the time this Financial Services Authority Regulation comes into force, the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number Kep-715/BL/2012 dated December 28, 2012 concerning the Investor Protection Fund, along with Regulation Number VI.A.4 which is its appendix, is revoked and declared invalid.

Article 34

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

In order for everyone to know it, it is ordered to enact this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on December 2, 2016

CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY,

s.d.
MULIAMAN D. HADAD

Enacted in Jakarta on December 7, 2016

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

s.d.
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 278

A copy in accordance with the original
Director of Law 1
Department of Law

s.d.
Yuliana

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 49 /POJK.04/2016

CONCERNING

INVESTOR PROTECTION FUND

I. GENERAL

That as of December 31, 2012, the functions, duties, and authority for the regulation and supervision of financial services activities in the Capital Market, Insurance, Pension Funds, Financing Institutions, and Other Financial Service Institutions have transferred from the Minister of Finance and the Capital Market and Financial Institution Supervisory Agency to the Financial Services Authority.

In relation to the above, it is necessary to restructure the existing regulations, particularly those related to the Capital Market sector, by converting Capital Market and Financial Institution Supervisory Agency regulations related to the Capital Market sector into Financial Services Authority Regulations. This restructuring is carried out so that there are Financial Services Authority Regulations related to the Capital Market sector that are consistent with Financial Services Authority Regulations in other sectors.

Based on the background thinking and aspects mentioned, it is necessary to replace the legislation in the Capital Market sector regulating the Investor Protection Fund, namely the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number: Kep-715/BL/2012 dated December 28, 2012 concerning the Investor Protection Fund along with Regulation Number VI.A.4 which is its appendix, into a Financial Services Authority Regulation concerning the Investor Protection Fund.

II. ARTICLE BY ARTICLE

Article 1
Clear enough.

Article 2
Clear enough.

Article 3
Clear enough.

Article 4
Clear enough.

Article 5
Clear enough.

Article 6
Clear enough.

Article 7
Clear enough.

Article 8
Clear enough.

Article 9
Clear enough.

Article 10
Clear enough.

Article 11
Clear enough.

Article 12
Clear enough.

Article 13
Clear enough.

Article 14
Clear enough.

Article 15
Clear enough.

Article 16
Clear enough.

Article 17
Clear enough.

Article 18
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
At the time this Financial Services Authority Regulation comes into force, the legislation in the Capital Market sector regulating the Internal Control of Securities Companies Conducting Business Activities as Securities Brokers that is in force is Regulation Number V.D.3, Appendix of the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number KEP-548/BL/2010 concerning Internal Control of Securities Companies Conducting Business Activities as Securities Brokers.

Letter d
Clear enough.

Article 19
Clear enough.

Article 20
Clear enough.

Article 21
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
The single investor identification number mentioned is also commonly referred to as single investor identification.

Article 22
Clear enough.

Article 23
Clear enough.

Article 24
Clear enough.

Article 25
Clear enough.

Article 26
Clear enough.

Article 27
Clear enough.

Article 28
Clear enough.

Article 29
Clear enough.

Article 30
Clear enough.

Article 31
Clear enough.

Article 32
Clear enough.

Article 33
Clear enough.

Article 34
Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5974