Financial Services Authority Regulation Number 73/POJK.04/2017 Regarding Securities Company Activities at Various Locations

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 73 /POJK.04/2017
REGARDING
SECURITIES COMPANY ACTIVITIES AT VARIOUS LOCATIONS BY THE GRACE OF THE ALMIGHTY GOD 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, since December 31, 2012, the functions, duties, and authority for regulating and supervising financial services activities in the capital market sector, including regulations regarding public offerings by shareholders, have transferred from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that to provide clarity and certainty regarding regulations on securities company activities at various locations, existing legal regulations in the capital market sector concerning securities company activities at various locations 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 mentioned in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Securities Company Activities at Various Locations;
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA

Considering: 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);

DECIDES:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING SECURITIES COMPANY ACTIVITIES AT VARIOUS LOCATIONS.

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. Underwriter of Securities is a Party that enters into a contract with an Issuer to conduct a Public Offering for the benefit of the Issuer with or without the obligation to purchase the remaining unsold Securities.
3. Securities Trading Intermediary is a Party that conducts business activities to buy and sell Securities for its own behalf or for other Parties.
4. Investment Manager is a Party whose business activities manage Securities Portfolios for clients or manage collective investment portfolios for a group of clients, except insurance companies, pension funds, and banks that conduct their own business activities based on legal regulations.

CHAPTER II
SECURITIES COMPANIES CONDUCTING ACTIVITIES AT OTHER LOCATIONS
Article 2
Securities Companies conducting activities at locations other than the headquarters must comply with the provisions as regulated in this Financial Services Authority Regulation.

Article 3
Securities Companies conducting activities at locations other than the headquarters must report information regarding the opening of activities conducted at locations other than the headquarters using the form as stated in the Appendix which is an integral part of this Financial Services Authority Regulation to the Financial Services Authority before conducting activities at other locations.

Article 4
(1) Securities Companies as referred to in Article 3 must also report:
a. the closure of each location; and b. any change of address, to the Financial Services Authority using the form as stated in the Appendix which is an integral part of this Financial Services Authority Regulation, no later than 7 (seven) days after such changes.
(2) In the event that in June or December there are no change reports as referred to in paragraph (1) letters a and b, Securities Companies must report the status of activities at locations other than the headquarters no later than 7 (seven) days after the end of June and December.

(3) Reports as referred to in paragraph (1) and paragraph (2) simultaneously show the final position of the form data entries.

Article 5
Securities Companies conducting business activities as Securities Trading Intermediaries that administer client securities accounts must have 1 (one) location as the headquarters that has at least 6 (six) functions consisting of custody functions, accounting functions, risk management functions, information technology functions, compliance functions, and marketing functions in accordance with legal regulations in the capital market sector regulating internal control of Securities Companies conducting business activities as Securities Trading Intermediaries.

Article 6
In the event that Securities Companies conduct activities at locations other than the headquarters, Securities Companies must comply with the following provisions:
a. the report on adjusted net working capital of the Securities Company must be conducted by the accounting department of the headquarters and must contain the results of activities from all locations of the Securities Company during the same period, in accordance with legal regulations in the capital market sector regulating the maintenance and reporting of adjusted net working capital; b. the marketing function of the headquarters must supervise the activities of all marketing functions of the Securities Company, provide a data center related to material matters regarding marketing function activities at various locations, and store the aforementioned data;
c. the marketing function at other locations may submit client orders directly to the orders and trading department of the headquarters, or indirectly through the marketing function department of the headquarters;

d. custody functions other than those in the headquarters are under the control and responsibility of the headquarters' custody function and must submit all information required to be stored in the custody function in accordance with legal regulations in the capital market sector regulating internal control of Securities Companies conducting business activities as Securities Trading Intermediaries to the headquarters' custody function on the same day; e. orders and instructions related to securities accounts from the marketing function in accordance with legal regulations in the capital market sector regulating internal control of Securities Companies conducting business activities as Securities Trading Intermediaries at locations other than the headquarters are under the responsibility of a marketing function official of the headquarters; f. the marketing function official as referred to in letter e must input the activities of all clients of the Securities Company as a Securities Trading Intermediary that administers client securities accounts; g. the accounting function in accordance with legal regulations in the capital market sector regulating internal control of Securities Companies conducting business activities as Securities Trading Intermediaries is under the control and responsibility of the head of the accounting function of the headquarters and all information related to accounting must be centralized in the accounting function of the headquarters; h. the receipt and delivery of Securities and/or client funds at each location of the Securities Company that has a marketing function must be conducted by the custody function at each of those locations, or by a custodian bank designated by the Securities Company for the headquarters' custody function account and directly related to the headquarters' custody function; and
i. Securities Companies conducting business activities as Securities Trading Intermediaries that administer client securities accounts may open client securities accounts, and receive client orders and instructions via the internet or securities company representatives that are under the control and responsibility of the marketing function of the headquarters or the marketing function at locations other than the headquarters.

Article 7
Orders, instructions, and requests to open securities accounts at Securities Companies conducting business activities as Securities Trading Intermediaries that administer client securities accounts in accordance with legal regulations in the capital market sector regulating internal control of Securities Companies conducting business activities as Securities Trading Intermediaries may be accepted and approved by computers automatically via the internet as long as the control parameters of each function are under the control and responsibility of each official of the headquarters.

Article 8
Securities Company offices conducting business activities as Securities Trading Intermediaries that administer client securities accounts at locations other than the headquarters are not required to have 6 (six) functions as referred to in legal regulations in the capital market sector regulating internal control of Securities Companies conducting business activities as Securities Trading Intermediaries.

Article 9
The functions of maintaining accounting, approving instructions, approving orders, approving accounts, and monitoring credit and risks related to specific parts at the headquarters as referred to in legal regulations in the capital market sector regulating internal control of Securities Companies conducting business activities as Securities Trading Intermediaries may be implemented using computer programs that are directly under the supervision of specific officials who control and are fully responsible for such functions.

Article 10
The functions of maintaining accounting, approving instructions, approving orders, approving accounts, and monitoring credit and risks related to specific parts at the headquarters as referred to in Article 9 may be implemented using computer programs provided that the control parameters for such functions are under the direct control of each official and cannot be replaced by anyone other than the official responsible for such functions.

Article 11
(1) Officials who have specific duties and responsibilities in accordance with legal regulations in the capital market sector regulating internal control of Securities Companies conducting business activities as Securities Trading Intermediaries must be granted authority to order and/or change computer programs or their parameters to ensure that automatic approval of orders, instructions, account openings, margin calls, and other functions is performed at all times by computers, as if performed manually.

(2) Computer programs as referred to in paragraph (1) must have adequate protection systems to ensure that such parameters cannot be changed without permission from each official responsible.

CHAPTER III
SANCTION PROVISIONS
Article 12
(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 causing the violation, consisting of:
a. written warnings; b. fines, namely the obligation to pay a certain amount of money;
c. restrictions on business activities;
d. suspension of business activities; e. revocation of business licenses; f. cancellation of approvals; and/or g. cancellation of registrations.
(2) Administrative sanctions as referred to in paragraph (1) 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 (1) letter a.
(3) Administrative sanctions in the form of fines as referred to in paragraph (1) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (1) letters c, d, e, f, or g.

Article 13
In addition to administrative sanctions as referred to in Article 12 paragraph (1), the Financial Services Authority may take certain actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 14
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 12 paragraph (1) and specific actions as referred to in Article 13 to the public.

CHAPTER IV
CLOSING PROVISIONS
Article 15
Upon the effective date of this Financial Services Authority Regulation, the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-27/PM/2000 concerning Securities Company Activities at Various Locations along with Regulation Number V.D.8 which is its appendix, is repealed and declared invalid.

Article 16
This Financial Services Authority Regulation takes effect on the date of enactment.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana

So that everyone knows, 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 December 21, 2017
CHAIRMAN OF THE COMMISSIONERS' COUNCIL
FINANCIAL SERVICES AUTHORITY, signed
WIMBOH SANTOSO

Enacted in Jakarta on December 22, 2017
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2017 NUMBER 294

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 73 /POJK.04/2017
REGARDING
SECURITIES COMPANY ACTIVITIES AT VARIOUS LOCATIONS

I. GENERAL
That since December 31, 2012, the functions, duties, and authority for regulating and supervising 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 Supervisory Agency and Financial Institutions 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 related to the capital market sector that are consistent with Financial Services Authority Regulations in other sectors.

Based on the background and aspects mentioned above, the Financial Services Authority needs to replace the existing legal regulations in the capital market sector regulating Securities Company activities at various locations, namely the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-27/PM/2000 concerning Securities Company Activities at Various Locations, along with Regulation Number V.D.8 which is its appendix, with a Financial Services Authority Regulation concerning Securities Company Activities at Various Locations.

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
Sufficiently clear.
Article 9
Sufficiently clear.
Article 10
Sufficiently clear.
Article 11
Sufficiently clear.
Article 12
Sufficiently clear.
Article 13
Sufficiently clear.
Article 14
Sufficiently clear.
Article 15
Sufficiently clear.
Article 16
Sufficiently clear.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6162