Financial Services Authority Regulation Number 74/POJK.04/2017 Regarding Sub-Accounts of Securities at Custody and Clearing Institutions

COPY
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 74/POJK.04/2017
REGARDING
SUB-ACCOUNTS OF SECURITIES AT CUSTODY AND CLEARING INSTITUTIONS

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, as of December 31, 2012, the functions, duties, and authority for regulating and supervising financial services activities in the capital market sector, including regulations regarding sub-accounts of securities at custody and clearing institutions, have shifted from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that to provide clarity and certainty regarding regulations on sub-accounts of securities at custody and clearing institutions, existing capital market sector regulations regarding sub-accounts of securities at custody and clearing institutions issued prior to the establishment of the Financial Services Authority need to be converted 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 regarding Sub-Accounts of Securities at Custody and Clearing Institutions;

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:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION REGARDING SUB-ACCOUNTS OF SECURITIES AT CUSTODY AND CLEARING INSTITUTIONS.

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 acknowledgment instruments, commercial paper, stocks, bonds, debt certificates, Unit Participation in Collective Investment Contracts, futures contracts over Securities, and any derivatives over Securities.
2. Sub-Account of Securities is the Securities account of each Client recorded in the Securities account of a Participant at a custody and clearing institution.
3. Custody and Clearing Institution is an entity that conducts Central Custodian activities for Custodian Banks, Securities Companies, and other parties.
4. Party is an individual, company, joint venture, association, or organized group.
5. Participant is a Securities Company or Custodian Bank that has opened a Securities account at a Custody and Clearing Institution.
6. Client is the holder of a Securities account at a Participant.
7. Single Investor Identification Number is a unique and specific code issued by the Custody and Clearing Institution and used by Clients, investors, and/or other parties based on statutory regulations to conduct activities related to Securities transactions and/or use other services provided by the Custody and Clearing Institution, entities designated by the Custody and Clearing Institution, or statutory regulations.
8. Clearing and Guarantee Institution is a Party that provides clearing and settlement guarantee services for Stock Exchange Transactions.

CHAPTER II
ADMINISTRATION OF CLIENT SECURITIES ACCOUNTS AT CUSTODY AND CLEARING INSTITUTIONS

Article 2
Participants who administer Client Securities accounts for Securities stored at a Custody and Clearing Institution must:
a. open Sub-Accounts of Securities in the name of each Client at the Custody and Clearing Institution; b. record Client Securities accounts in Sub-Accounts of Securities;
c. ensure that the balance of each Client's Securities account recorded in the Participant's books is always the same as the balance of each Client's Securities account recorded in the Sub-Account of Securities; and
d. ensure that the identity of Clients recorded in the Participant's books is the same as the identity of Clients recorded in the Sub-Account of Securities.

Article 3
(1) The opening of Sub-Accounts of Securities as referred to in Article 2 letter a must be followed by the creation of a Single Investor Identification Number for Clients by Participants at the Custody and Clearing Institution, for Clients who do not yet have one. (2) The creation of Single Investor Identification Numbers in Indonesia is carried out by the Custody and Clearing Institution. (3) Participants must submit the Sub-Account of Securities numbers as referred to in Article 2 letter a and the Single Investor Identification Numbers for Clients as referred to in paragraph (1) to each respective Client.

Article 4
In order to execute the settlement of Securities transactions, the Clearing and Guarantee Institution and/or the Custody and Clearing Institution may require Participants to open Sub-Accounts of Securities specifically used for collateral placement for each Client.

CHAPTER III
PROVISION OF INFORMATION ACCESS ON SUB-ACCOUNTS OF SECURITIES

Article 5
Participants must provide information access to Clients enabling Clients to directly monitor the movements and/or balances of Securities and/or funds stored in Sub-Accounts of Securities in the name of such Clients at the Custody and Clearing Institution.

Article 6
Custody and Clearing Institutions must provide information access enabling Clients to directly monitor the movements and/or balances of Securities and/or funds stored in Sub-Accounts of Securities in the name of such Clients at the Custody and Clearing Institution to Clients who have been granted access by Participants to access the Clients' Sub-Accounts of Securities at the Custody and Clearing Institution.

CHAPTER IV
CONTRACTS FOR OPENING SECURITIES ACCOUNTS AT PARTICIPANTS

Article 7
Contracts for opening Client Securities accounts at Participants must comply with statutory regulations and contain provisions regarding:
a. the granting of authority by Clients to Participants to open Sub-Accounts of Securities and create Single Investor Identification Numbers for Clients; b. the obligation of Participants to execute the authority to open Sub-Accounts of Securities and create Single Investor Identification Numbers for Clients; and
c. the rights of Clients to request reports and/or verify the consistency between the balance of Client Securities accounts in the Participant's books and the balance of Client Securities in Sub-Accounts of Securities at any time.

Article 8
Contracts for opening Participants' Securities accounts at Custody and Clearing Institutions must contain provisions regarding the opening of Sub-Accounts of Securities and the creation of Single Investor Identification Numbers for Clients.

CHAPTER V
OPENING SECURITIES ACCOUNTS AND CREATING SINGLE INVESTOR IDENTIFICATION NUMBERS

Article 9
In opening Sub-Accounts of Securities and creating Single Investor Identification Numbers for Clients, Participants must submit Client data to the Custody and Clearing Institution containing at least the following information:
a. name; b. place of birth/incorporation;
c. date of birth/incorporation;
d. identification number; e. domicile; f. nationality for individual Clients; g. Client type as an individual or institutional; and h. business type, for institutional Clients.

Article 10
(1) In opening Sub-Accounts of Securities, Custody and Clearing Institutions must:
a. provide adequate and secure Sub-Account of Securities administration systems; b. administer each Sub-Account of Securities separately and must comply with statutory regulations related to Securities accounts; and
c. submit daily reports regarding Sub-Account of Securities positions to each Participant.
(2) Custody and Clearing Institutions are only responsible to Participants for the administration of Sub-Accounts of Securities at the Custody and Clearing Institution and are not responsible to other parties, including Clients.

CHAPTER VI
OBLIGATIONS OF CUSTODY AND CLEARING INSTITUTIONS

Article 11
Custody and Clearing Institutions must carry out the following:
a. conduct periodic examinations or evaluations at least 1 (one) time in 1 (one) year regarding the fulfillment of the implementation of opening Sub-Accounts of Securities and creating Single Investor Identification Numbers for Clients by Participants; and b. submit reports on the results of periodic examinations or evaluations regarding the fulfillment of implementation as referred to in paragraph (1) to the Financial Services Authority if there are suspicions of violations committed by Participants.

CHAPTER VII
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, in the form 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.
(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 independently 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 specific 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 VIII
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 and Financial Institutions Number Kep-362/BL/2012 concerning Sub-Accounts of Securities at Custody and Clearing Institutions along with Regulation Number III.C.7 which is its attachment, is revoked and declared invalid.

Article 16
This Financial Services Authority Regulation takes effect upon being enacted.

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

For the information of everyone, 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 295

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 74/POJK.04/2017
REGARDING
SUB-ACCOUNTS OF SECURITIES AT CUSTODY AND CLEARING INSTITUTIONS

I. GENERAL

That as of 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 shifted from the Minister of Finance and the capital market and financial institutions 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 related to the capital market sector that are consistent with Financial Services Authority regulations in other sectors.

Based on the background and aspects mentioned, it is necessary to replace the capital market sector statutory regulations regulating Sub-Accounts of Securities at Custody and Clearing Institutions, namely the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institutions Number Kep-362/BL/2012 concerning Sub-Accounts of Securities at Custody and Clearing Institutions along with Regulation Number III.C.7 which is its attachment, with a Financial Services Authority Regulation regarding Sub-Accounts of Securities at Custody and Clearing Institutions.

II. ARTICLE BY ARTICLE

Article 1
Sufficiently clear.

Article 2
Sufficiently clear.

Article 3
In practice, the Single Investor Identification Number is also commonly referred to as Single Investor Identification.

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 6163