Implementation of Risk Management for Securities Companies Acting as Underwriters and Securities Broker Intermediaries that are Stock Exchange Members

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 6 /POJK.04/2021
CONCERNING
THE IMPLEMENTATION OF RISK MANAGEMENT FOR SECURITIES COMPANIES ACTING AS UNDERWRITERS AND SECURITIES BROKER INTERMEDIARIES THAT ARE MEMBERS OF THE STOCK EXCHANGE BY THE GRACE OF GOD THE ALMIGHTY THE COMMISSIONERS BOARD OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that the external and internal conditions of securities companies acting as underwriters and securities broker intermediaries that are members of the stock exchange can affect business development and increase the complexity of risk levels faced by such securities companies; b. that the increasing complexity of risks must be balanced with the implementation of risk management that includes identification, measurement, monitoring, and control of risks;
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 Implementation of Risk Management for Securities Companies Acting as Underwriters and Securities Broker Intermediaries that are Members of the Stock Exchange;

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: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE IMPLEMENTATION OF RISK MANAGEMENT FOR SECURITIES COMPANIES ACTING AS UNDERWRITERS AND SECURITIES BROKER INTERMEDIARIES THAT ARE MEMBERS OF THE STOCK EXCHANGE.

CHAPTER I
GENERAL PROVISIONS

Article 1
In this Financial Services Authority Regulation, the following terms are defined:

1. Securities Company is a party that conducts business activities as an underwriter, securities broker intermediary, and/or investment manager.
2. Underwriter is a party that enters into a contract with the issuer to conduct a public offering for the benefit of the issuer with or without the obligation to purchase unsold securities.
3. Securities Broker Intermediary is a party that conducts business activities of buying and selling securities for its own interest or for the interest of other parties.
4. Stock Exchange Member is a Securities Broker Intermediary that has obtained a business license from the Financial Services Authority and has the right to use the stock exchange's system and/or facilities in accordance with stock exchange regulations.
5. Risk is the potential loss resulting from the occurrence of a specific event.
6. Operational Risk is Risk caused by insufficient or non-functioning internal processes, human error, system failure, and/or external events that affect the operations of the Securities Company.
7. Credit Risk is Risk caused by the failure of clients and/or other parties to fulfill their obligations to the Securities Company.
8. Market Risk is Risk caused by the movement of market variables from the portfolio owned by the Securities Company.
9. Liquidity Risk is Risk resulting from the inability of the Securities Company to fulfill obligations arising from securities transaction debts, whether incurred by clients or the Securities Company itself, and/or other debts.
10. Compliance Risk is Risk caused by the Securities Company's failure to comply with and/or implement applicable laws and regulations and provisions applicable to the Securities Company.
11. Legal Risk is Risk caused by legal claims, weaknesses in the legal aspects of agreements made by the Securities Company, and/or activities and products not yet regulated by laws and regulations.
12. Reputational Risk is Risk caused by a decline in stakeholder confidence stemming from client complaints and/or negative news reports about the Securities Company.
13. Strategic Risk is Risk caused by the Securities Company's inaccuracy in making and/or implementing strategic decisions and failure to anticipate changes in the business environment.
14. Risk Management is a series of methodologies and procedures used to identify, measure, monitor, and control Risks arising from all business activities of the Securities Company.
15. Board of Directors is the organ of the Securities Company authorized and fully responsible for managing the Securities Company for the benefit of the Securities Company, in accordance with the purpose and objectives of the Securities Company, and representing the Securities Company, both inside and outside the court, in accordance with the articles of association.
16. Board of Commissioners is the organ of the Securities Company tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors.

Article 2
This Financial Services Authority Regulation applies to:
a. Securities Companies that conduct business activities as Underwriters and Securities Broker Intermediaries that are Members of the Stock Exchange; and b. Securities Companies that conduct business activities as Securities Broker Intermediaries that are Members of the Stock Exchange.

CHAPTER II
IMPLEMENTATION OF RISK MANAGEMENT

Article 3
(1) Securities Companies as referred to in Article 2 are required to implement Risk Management effectively.
(2) The implementation of Risk Management as referred to in paragraph (1) must at least include:
a. active supervision by the Board of Directors and Board of Commissioners of the Securities Company; b. adequacy of Risk Management policies and procedures and the establishment of Risk limits;
c. adequacy of the processes for identification, measurement, monitoring, and control of Risks as well as the Risk Management information system; and
d. a comprehensive internal control system.

Article 4
The implementation of Risk Management as referred to in Article 3 must be adjusted to the objectives, business policies, size and complexity of the business, and the capabilities of the Securities Company.

Article 5
(1) Risks as referred to in Article 3 include:
a. Operational Risk; b. Credit Risk;
c. Market Risk;
d. Liquidity Risk; e. Compliance Risk; f. Legal Risk; g. Reputational Risk; and h. Strategic Risk.
(2) Securities Companies are required to implement Risk Management for all Risks as referred to in paragraph (1).

CHAPTER III
ACTIVE SUPERVISION BY THE BOARD OF DIRECTORS AND BOARD OF COMMISSIONERS

Article 6
Securities Companies are required to establish clear authorities and responsibilities at every level of position related to the implementation of Risk Management as referred to in Article 3 paragraph (2) letter a.

Article 7
(1) The authorities and responsibilities as referred to in Article 6 for the Board of Directors must at least include:
a. drafting written and comprehensive Risk Management policies and strategies; b. being responsible for the implementation of Risk Management policies and the overall Risk exposure taken by the Securities Company;
c. evaluating and deciding on transactions requiring Board of Directors approval;
d. ensuring the improvement of human resources competence related to Risk Management; e. ensuring that the Risk Management function operates independently; and f. conducting periodic reviews at least 1 (one) time in 1 (one) year to ensure:

1. the accuracy of Risk assessment methodologies;
2. the adequacy of the implementation of the Risk Management information system; and
3. the appropriateness of Risk Management policies and procedures and the establishment of Risk limits.
   (2) To carry out the authorities and responsibilities as referred to in paragraph (1), the Board of Directors must have adequate understanding of the Risks inherent in all functional activities of the Securities Company and be able to take necessary actions in accordance with the Securities Company's Risk profile.

Article 8
(1) The authorities and responsibilities as referred to in Article 6 for the Board of Commissioners must at least include:
a. approving and evaluating Risk Management policies; b. evaluating and/or providing improvement directions regarding the Board of Directors' accountability in implementing Risk Management policies as referred to in letter a; and
c. evaluating and deciding on Board of Directors' requests related to transactions requiring Board of Commissioners approval.
(2) The evaluation of Risk Management policies as referred to in paragraph (1) letter b must be conducted at least 1 (one) time in 1 (one) year or ad hoc in the event of changes in factors significantly affecting business activities.

CHAPTER IV
ADEQUACY OF RISK MANAGEMENT POLICIES AND PROCEDURES AND ESTABLISHMENT OF RISK LIMITS

Article 9
Risk Management policies as referred to in Article 3 paragraph (2) letter a must at least contain:
a. comprehensive Risk Management strategies and frameworks; b. prudential principles;
c. provision of sufficient capital;
d. fulfillment of laws and regulations provisions; e. early detection systems; f. identification and diversification of Risks; g. measurement, monitoring, and control of Risks; h. determination of Risk limits and establishment of Risk tolerance;
i. preparation of emergency plans in worst-case conditions; and
j. transparency and a Risk-aware culture.

Article 10
(1) Securities Companies are required to adjust Risk Management procedures and the establishment of Risk limits as referred to in Article 3 paragraph (2) letter b to the level of Risks to be taken and the Risk tolerance of the Securities Company. (2) Risk Management procedures and the establishment of Risk limits as referred to in paragraph (1) must at least include:
a. clear accountability and levels of delegation of authority; b. periodic review of Risk Management procedures and the establishment of Risk limits; and
c. adequate documentation of Risk Management procedures and the establishment of Risk limits.
(3) The establishment of Risk limits as referred to in paragraph (2) must include:
a. overall limits; and b. limits per type of Risk.
(4) Securities Companies must have an approval mechanism in the event of limit breaches.

CHAPTER V
ADEQUACY OF THE PROCESS FOR IDENTIFICATION, MEASUREMENT, MONITORING, AND CONTROL OF RISKS AND RISK MANAGEMENT INFORMATION SYSTEM

First Section
General

Article 11
(1) Securities Companies are required to conduct the process of identification, measurement, monitoring, and control of Risks as referred to in Article 3 paragraph (2) letter c regarding material Risk factors. (2) The implementation of the process of identification, measurement, monitoring, and control of Risks as referred to in paragraph (1) must be supported by:
a. adequate management information systems; and b. accurate and informative reports regarding financial conditions, functional activity performance, and the Securities Company's Risk exposure.

Second Section
Process for Identification, Measurement, Monitoring, and Control of Risks

Article 12
(1) In carrying out the Risk identification process, Securities Companies must conduct analysis at least on:
a. Risk characteristics inherent in the Securities Company; and b. Risks from the Securities Company's products and business activities.
(2) In carrying out Risk measurement, Securities Companies must at least conduct:
a. periodic evaluation of the suitability of assumptions, data sources, and procedures used to measure Risks; and b. improvement of the Risk measurement system in the event of changes in the Securities Company's business activities, products, transactions, and material Risk factors. (3) In carrying out Risk monitoring, Securities Companies must at least conduct:
a. evaluation of Risk exposure; and b. improvement of the reporting process and scope.
(4) Securities Companies must carry out the Risk control process to manage Risks that could endanger business continuity.

Third Section
Risk Management Information System

Article 13
(1) The Risk Management information system as referred to in Article 3 paragraph (2) letter c must include reports or information at least regarding:
a. Risk exposure; b. compliance with Risk Management policies and procedures as referred to in Article 9 and the establishment of Risk limits as referred to in Article 10; and
c. the realization of Risk Management implementation compared to established targets.
(2) Reports or information generated from the Risk Management information system as referred to in paragraph (1) must be submitted by the work unit performing the Risk Management function to the director overseeing the Risk Management function and/or the Securities Company's Risk Management Committee routinely at least 1 (one) time in 1 (one) year for the position as of December 31.

CHAPTER VI
COMPREHENSIVE INTERNAL CONTROL SYSTEM

Article 14
The comprehensive internal control system as referred to in Article 3 paragraph (2) letter d is implemented in accordance with:
a. Financial Services Authority regulations regarding internal control of Securities Companies conducting business activities as Securities Broker Intermediaries; and b. Financial Services Authority regulations regarding the implementation of corporate governance for Securities Companies conducting business activities as Underwriters and Securities Broker Intermediaries.

CHAPTER VII
ORGANIZATION AND FUNCTION OF RISK MANAGEMENT

First Section
General

Article 15
(1) In the implementation of effective Risk Management processes and systems as referred to in Article 3, Securities Companies are required to form a work unit performing the Risk Management function. (2) In the implementation of Risk Management processes and systems as referred to in paragraph (1), Securities Companies may form a Risk Management Committee.

Second Section
Work Unit Performing the Risk Management Function

Article 16
(1) The implementation of the work unit as referred to in Article 15 paragraph (1) must at least include:
a. drafting Risk Management policies; b. objective testing, evaluation, and recommendation of improvements regarding the implementation of the Risk Management system, at least 1 (one) time in 1 (one) year or at more frequent intervals in the event of changes in factors significantly affecting the Securities Company's business activities; and
c. monitoring, identification, measurement, and follow-up regarding matters related to Risk Management requiring the attention of the Board of Directors.
(2) The implementation of the work unit as referred to in paragraph (1) does not override laws and regulations provisions regarding internal control of Securities Companies conducting business activities as Securities Broker Intermediaries. (3) The person in charge of the Risk Management work unit as referred to in Article 15 paragraph (1) must possess a Risk Management certificate. (4) The Risk Management certificate as referred to in paragraph (3) is issued by a professional certification body registered with the Financial Services Authority.

Third Section
Risk Management Committee

Article 17
(1) The Risk Management Committee as referred to in Article 15 paragraph (2) must at least consist of:
a. Board of Directors members; and b. officials under the Board of Directors who oversee functions within the Securities Company.
(2) The Risk Management Committee as referred to in paragraph (1) has the authority and responsibility to provide recommendations to the President Director, at least including:
a. drafting policies, strategies, and guidelines for the implementation of Risk Management; b. improvement or refinement of Risk Management implementation based on the results of Risk Management implementation evaluation; and
c. determination of matters related to business decisions that deviate from normal procedures.

CHAPTER VIII
MANAGEMENT OF RISKS FROM OTHER ACTIVITIES

Article 18
(1) Securities Companies are required to have written Risk Management policies to manage Risks inherent in other activities of the Securities Company.
(2) The Risk Management policies as referred to in paragraph (1) must comply with laws and regulations provisions regarding other activities for Securities Companies conducting business activities as Underwriters and Securities Broker Intermediaries.

CHAPTER IX
ASSESSMENT OF RISK MANAGEMENT IMPLEMENTATION

Article 19
(1) Securities Companies are required to prepare a self-assessment of Risk Management implementation at least 1 (one) time in 1 (one) year for the position as of December 31. (2) Securities Companies are required to submit the self-assessment report results as referred to in paragraph (1) to the Financial Services Authority no later than February 28. (3) If the deadline for submitting the self-assessment report results as referred to in paragraph (2) falls on a holiday, the submission deadline is on the next working day. (4) Further provisions regarding the form and structure of the assessment as referred to in paragraph (1) and the procedure for submitting the self-assessment report results as referred to in paragraph (2) are established by the Financial Services Authority.

Article 20
(1) The Financial Services Authority may request Securities Companies to revise the self-assessment report results if, based on evaluation conducted by the Financial Services Authority, the report does not correspond to the actual conditions of the Securities Company. (2) The revision of the self-assessment report results as referred to in paragraph (1) must be submitted to the Financial Services Authority no later than 15 (fifteen) working days from the receipt of the notification letter from the Financial Services Authority.

CHAPTER X
ADMINISTRATIVE SANCTIONS

Article 21
(1) Any party violating the provisions as referred to in Article 3 paragraph (1), Article 4, Article 5 paragraph (2), Article 6, Article 10 paragraph (1), paragraph (3), paragraph (4), Article 11, Article 12, Article 13 paragraph (2), Article 15 paragraph (1), Article 16 paragraph (3), Article 18 paragraph (1), Article 19 paragraph (1), paragraph (2), and Article 20 paragraph (2) shall be subject to administrative sanctions. (2) Sanctions as referred to in paragraph (1) shall also be imposed on parties causing the violation 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) include:
a. written warning; b. fines in the form of an obligation to pay a specific 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) 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 (4) letter a. (6) Administrative sanctions in the form of fines as referred to in paragraph (4) letter b may be imposed alone or together with administrative sanctions as referred to in paragraph (4) letters c, d, e, f, or g. (7) The procedure for imposing sanctions as referred to in paragraph (3) is carried out in accordance with laws and regulations provisions.

Article 22
In addition to administrative sanctions as referred to in Article 21 paragraph (4), the Financial Services Authority may take specific actions against any party violating the provisions of this Financial Services Authority Regulation.

Article 23
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 21 paragraph (4) and specific actions as referred to in Article 22 to the public.

CHAPTER XI
TRANSITIONAL PROVISIONS

Article 24
Provisions regarding risk management policies as referred to in Article 37 paragraph (2) of Financial Services Authority Regulation Number 57/POJK.04/2017 concerning the Implementation of Corporate Governance for Securities Companies Acting as Underwriters and Securities Broker Intermediaries shall follow the provisions in this Financial Services Authority Regulation.

CHAPTER XII
CLOSING PROVISIONS

Article 25
Provisions regarding risk management policies as referred to in:
a. Article 16 paragraph (3); and b. Article 19 paragraph (2), shall take effect after 2 (two) years calculated from the date this Financial Services Authority Regulation is promulgated.

Article 26
Upon the effective date of this Financial Services Authority Regulation, provisions regarding risk management policies as referred to in Article 37 paragraph (2) of Financial Services Authority Regulation Number 57/POJK.04/2017 concerning the Implementation of Corporate Governance for Securities Companies Acting as Underwriters and Securities Broker Intermediaries (State Gazette of the Republic of Indonesia Year 2017 Number 211, Supplement to the State Gazette of the Republic of Indonesia Number 6126) are repealed and declared invalid.

Article 27
This Financial Services Authority Regulation shall take effect after 1 (one) year calculated from the date of promulgation.

This copy is in accordance with the original
Director of Law 1
Legal Department signed
Mufli Asmawidjaja

To ensure that everyone knows, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on March 12, 2021
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on March 17, 2021
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2021 NUMBER 80

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 6 /POJK.04/2021
CONCERNING
THE IMPLEMENTATION OF RISK MANAGEMENT FOR SECURITIES COMPANIES ACTING AS UNDERWRITERS AND SECURITIES BROKER INTERMEDIARIES THAT ARE MEMBERS OF THE STOCK EXCHANGE

I. GENERAL
The external and internal conditions of Securities Companies acting as Underwriters and Securities Broker Intermediaries that are Members of the Stock Exchange can affect business development and increase the complexity of risk levels faced by such Securities Companies. External conditions of Securities Companies include, among others, the development of the Capital Market industry, while internal conditions include but are not limited to the complexity of business activities conducted by such Securities Companies.

With the increasing complexity of Risks faced by Securities Companies acting as Underwriters and Securities Broker Intermediaries that are Members of the Stock Exchange, it is necessary to balance this with the implementation of Risk Management that includes identification, measurement, monitoring, and control of Risks.

Based on these conditions, it is deemed necessary to establish regulations regarding the implementation of Risk Management for Securities Companies acting as Underwriters and Securities Broker Intermediaries that are Members of the Stock Exchange.

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.

Article 2
Sufficiently clear.

Article 3
Sufficiently clear.

Article 4
The size and complexity of the business include, among others, diversity in transaction types, services, and business networks. The capabilities of the Securities Company include, among others, financial capabilities, supporting infrastructure, and human resource capabilities.

Article 5
Paragraph (1)
Letter a
Operational Risk includes, among others, Risks due to unreliable systems, employee workload, and the complexity of trading service offerings.

Letter b
Credit Risk includes, among others, Risks arising from counterparty failure and settlement failure.

Counterparty failure Risk is a Risk arising from the failure of the counterparty to fulfill its obligations.

Settlement failure Risk is a Risk arising from the failure to deliver cash and/or securities on the agreed settlement date of securities sales and/or purchases.

Letter c
Market Risk includes, among others, Risks due to price changes

Securities (adverse movement) in the portfolio held by the Securities Company.

Letter d
Liquidity Risk includes, among others, Risk related to the Securities Company's ability to meet the required minimum adjusted net working capital obligations and the settlement of regular transactions.

Letter e
Compliance Risk includes, among others, Risk related to the Securities Company's obligations to meet regulations in the capital market sector.

Letter f
Legal Risk includes, among others, Risk related to legal lawsuits against the Securities Company by third parties or the Securities Company's clients due to an agreement with weak clauses, which can cause significant losses to the Securities Company.

Letter g
Reputational Risk includes, among others, Risk related to client complaints against the Securities Company for negligence, which can cause significant losses to the Securities Company because it can lead to compensation to clients or even sanctions from the Financial Services Authority.

Letter h
Strategic Risk includes, among others, Risk related to the failure to anticipate changes in the business environment, including changes in technology, changes in macroeconomic conditions, market competition dynamics, and changes in relevant authority policies.

Paragraph (2)
It is clear enough.

Article 6
The determination of authority and responsibility can be regulated in documents including company regulations, Standard Operating Procedures, or charters established by the Board of Directors and Board of Commissioners.

Article 7
Paragraph (1)
Letter a
It is clear enough.

Letter b
It is clear enough.

Letter c
The term "evaluating and deciding on transactions requiring Board of Directors approval" includes, among others, establishing criteria and a hierarchical process for transactions, whether for the benefit of clients or for the benefit of the Securities Broker itself or affiliated parties of the Securities Broker, which require Board of Directors approval.

Letter d
It is clear enough.

Letter e
The term "independent" includes, among others:

1. the separation of the Risk Management function from related operational functions (risk-taking units) of the Securities Company; and
2. the application of Risk Management free from conflicts of interest between the Securities Company and individuals within the Securities Company.

Letter f
It is clear enough.

Paragraph (2)
The term "necessary actions" includes, among others, providing recommendations or proposals regarding the implementation of Risk Management to all functions within the Securities Company.

Article 8
Paragraph (1)
The discussion regarding authority and responsibility is carried out through Board of Commissioners Meetings in accordance with the regulations of the Financial Services Authority regarding the implementation of corporate governance for Securities Companies conducting business activities as Underwriters of Securities and Securities Brokers.

Letter a
Risk Management Policy includes, among others, strategy and Risk framework established in accordance with the level of Risk to be taken (risk appetite) and Risk tolerance (risk tolerance).

Letter b
Evaluation is carried out, among others, through the evaluation of the Board of Directors' accountability.

Letter c
It is clear enough.

Paragraph (2)
Changes in factors significantly affecting business activities include, among others, changes in regulator policy.

Article 9
Letter a
It is clear enough.

Letter b
It is clear enough.

Letter c
It is clear enough.

Letter d
It is clear enough.

Letter e
In practice, the early detection system referred to is commonly called an early warning system.

Letter f
It is clear enough.

Letter g
It is clear enough.

Letter h
In practice, the Risk limit taken is commonly called risk appetite, and Risk tolerance is commonly called risk tolerance.

Letter i
In practice, the preparation of emergency plans is commonly called contingency plan, and in the worst-case scenario, it is commonly called worst case scenario.

Letter j
It is clear enough.

Article 10
Paragraph (1)
In practice, the term "level of Risk to be taken" referred to is commonly called (risk appetite).
The level of Risk to be taken (risk appetite) is the level and scope of Risk willing to be taken in order to achieve objectives. The level of Risk to be taken is reflected in business strategy and objectives. Risk tolerance is the level and scope of Risk established as a maximum and is an elaboration of the level of Risk to be taken. The level of Risk to be taken (risk appetite) and Risk tolerance must align with the business strategy, Risk profile, and capital planning of the Securities Company.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
It is clear enough.

Article 11
Paragraph (1)
The term "material Risk factors (risk factors)" refers to Risk factors, both quantitative and qualitative, that significantly affect the financial condition of the Securities Company.

Paragraph (2)
Letter a
The term "adequate management information system" refers to a complete, accurate, useful, and timely management information system for making appropriate and accountable decisions, and communicated to interested parties.

Letter b
It is clear enough.

Article 12
Paragraph (1)
Risk Identification can be based, among others, on past loss experiences, whether within the Securities Company or in the Securities Company's industry as a whole or other relevant financial industries.

Letter a
It is clear enough.

Letter b
It is clear enough.

Paragraph (2)
Letter a
Periodic evaluation frequency is carried out in accordance with business development and external conditions affecting the condition of the Securities Company.

Letter b
Factors that significantly affect material Risk include, among others, the addition of new business lines that can affect the financial condition of the Securities Company.

Paragraph (3)
Letter a
Evaluation of Risk exposure is carried out by monitoring and reporting material Risk or Risk that impacts the capital condition of the Securities Company.

Letter b
Refinement of the reporting process and scope is carried out, among others, if there are changes in business activities, products, transactions, Risk factors, information technology, and the Securities Company's Risk Management information systems that are material.

Paragraph (4)
Risk Control can be carried out, among others, through hedging, Risk mitigation methods, and capital addition to absorb potential losses.

Article 13
Paragraph (1)
Letter a
Reports or information on Risk exposure cover quantitative and qualitative exposure, both overall (composite) and detailed exposure for each type of Risk.

Letter b
It is clear enough.

Letter c
It is clear enough.

Paragraph (2)
It is clear enough.

Article 14
Letter a
The term "Financial Services Authority regulations regarding internal control of Securities Companies conducting business activities as Securities Brokers" refers to Financial Services Authority Regulation Number 50/POJK.04/2020 regarding Internal Control of Securities Companies Conducting Business Activities as Securities Brokers.

Letter b
The term "Financial Services Authority regulations regarding the implementation of corporate governance of Securities Companies" refers to Financial Services Authority Regulation Number 57/POJK.04/2017 regarding the Implementation of Corporate Governance of Securities Companies Conducting Business Activities as Underwriters of Securities and Securities Brokers.

Article 15
It is clear enough.

Article 16
Paragraph (1)
It is clear enough.

Paragraph (2)
The work units referred to can be combined or separated from the Risk Management unit in accordance with Financial Services Authority Regulation Number 50/POJK.04/2020 regarding Internal Control of Securities Companies Conducting Business Activities as Securities Brokers.

Paragraph (3)
It is clear enough.

Paragraph (4)
It is clear enough.

Article 17
Paragraph (1)
It is clear enough.

Paragraph (2)
Letter a
It is clear enough.

Letter b
It is clear enough.

Letter c
Including in business decisions that deviate from normal procedures includes, among others, exceeding business expansion beyond other activities permitted in regulatory provisions.

Article 18
Paragraph (1)
It is clear enough.

Paragraph (2)
The term "regulatory provisions regarding other activities for Securities Companies conducting business activities as Underwriters of Securities and Securities Brokers" refers to Financial Services Authority Regulation Number 20/POJK.04/2016 regarding Licensing of Securities Companies Conducting Business Activities as Underwriters of Securities and Securities Brokers along with its implementing provisions.

Article 19
It is clear enough.

Article 20
It is clear enough.

Article 21
It is clear enough.

Article 22
The term "specific actions" includes, among others, ordering the Securities Company to revise the self-assessment report on the implementation of Risk Management or ordering the Securities Company to stop certain transactions due to the high Risk of the Securities Company.

Article 23
It is clear enough.

Article 24
It is clear enough.

Article 25
It is clear enough.

Article 26
It is clear enough.

Article 27
It is clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6670