OJK Circular No. 9/SEOJK.04/2014 on Amendments to Bapepam-LK Chairman Circular No. SE-16/BL/2012 Regarding Explanations of Bapepam-LK Regulation No. V.D.3 on Internal Control of Securities Companies Acting as Securities Brokers

To:

1. The Board of Directors of Securities Companies conducting business activities as Securities Brokers;
2. The Board of Directors of PT Indonesia Stock Exchange; and
3. The Board of Directors of PT Indonesia Central Securities Depository;
   At their respective locations.

COPY

FINANCIAL SERVICES AUTHORITY CIRCULAR
NUMBER 9/SEOJK.04/2014

REGARDING
AMENDMENTS TO THE CIRCULAR OF THE CHAIRMAN OF BAPEPAM AND LK NUMBER:
SE-16/BL/2012 REGARDING EXPLANATIONS OF BAPEPAM AND LK REGULATION NUMBER V.D.3 ON INTERNAL CONTROL OF SECURITIES COMPANIES CONDUCTING BUSINESS ACTIVITIES AS SECURITIES BROKERS

In order to further encourage the increase in the number of investors in the Capital Market through Securities Companies conducting business activities as Securities Brokers, it is necessary to amend the provisions in the Circular of the Chairman of Bapepam and LK Number: SE-16/BL/2012 regarding Explanations of Bapepam and LK Regulation Number V.D.3 on Internal Control of Securities Companies Conducting Business Activities as Securities Brokers dated December 4, 2012, through this Financial Services Authority Circular as follows:

I. GENERAL PROVISIONS

Securities Companies conducting business activities as Securities Brokers may appoint other parties (outsourcing) to perform marketing functions, with the condition that the delegation of the execution of such marketing functions is carried out with reference to Regulation Number V.D.9 regarding Guidelines for Agency Agreements of Securities Company Agents who are Members of the Stock Exchange, Appendix of the Decision of the Chairman of Bapepam and LK Number: Kep-28/PM/2000 dated June 30, 2000, as referred to in provision item 13 letter a item 1) of Regulation Number V.D.3 on Internal Control of Securities Companies Conducting Business Activities as Securities Brokers, Appendix of the Decision of the Chairman of Bapepam and LK Number Kep-548/BL/2010 dated December 28, 2010.

II. AMENDMENTS TO THE CIRCULAR

Provision item 10 letter e item 2) of the Circular of the Chairman of Bapepam and LK Number: SE-16/BL/2012 regarding Explanations of Bapepam and LK Regulation Number V.D.3 on Internal Control of Securities Companies Conducting Business Activities as Securities Brokers dated December 4, 2012, is deleted, so that provision item 10 reads as follows:

10. Delegation of the execution of Securities Broker (PPE) functions to other parties (outsourcing)

Regarding the delegation of the execution of PPE functions to other parties as regulated in provision item 13 of Bapepam and LK Regulation Number V.D.3, PPE must fulfill the following matters:

a. PPE must ensure that the standards for the execution of functions delegated to other parties are at least in accordance with the execution of PPE functions based on Regulation Number V.D.3.

b. Activities related to reporting to regulators are not included in the functions delegated to other parties.

c. PPE must appoint at least one employee to be responsible for the functions delegated to other parties.

d. In accordance with provision item 13 letter a item 1) of Regulation Number V.D.3, PPE may appoint other parties (outsourcing) to perform marketing functions with reference to Regulation Number V.D.9 regarding Guidelines for Agency Agreements of Securities Company Agents who are Members of the Stock Exchange, Appendix of the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institution Number KEP-28/PM/2000 dated June 30, 2000.

e. PPE activities are not included in the category of outsourcing marketing functions, provided they meet the following criteria:
1) PPE organizes marketing functions itself and does not delegate such functions to other parties. PPE may receive references of potential investors from other parties to become its clients, and subsequently, PPE employees perform marketing functions based on Regulation Number V.D.3 and Regulation Number V.D.10.
2) Deleted.
3) PPE stores and keeps confidential customer data as stipulated in Article 35 and Article 47 of Law Number 8 of 1995 concerning the Capital Market.

f. In the event that PPE delegates the execution of Custodian functions to a Custodian Bank or another PPE performing Custodian functions, hereinafter referred to as the Custodian Service Provider, then PPE must complete additional documents as follows:
1) A power of attorney from PPE regarding the delegation of access to the Custodian Service Provider for the LPP system and the Clearing and Guarantee Institution system;
2) A notice to PPE customers informing them that the PPE's custodian functions are delegated to the Custodian Service Provider;
3) A Confidentiality Agreement (non-disclosure agreement) agreed upon by PPE with the Custodian Service Provider; and
4) The Custodian Service Provider is subject to the provisions of Article 47 of Law Number 8 of 1995 concerning the Capital Market.

III. CLOSING

This Financial Services Authority Circular shall take effect on the date of determination.

To ensure that everyone is aware of it, it is ordered to announce this Financial Services Authority Circular by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on June 3, 2014

EXECUTIVE HEAD OF THE
CAPITAL MARKET SUPERVISOR

Signed,

NURHAIDA
First Legal Director
Legal Department,

Signed,

Tini Kustini
First Legal Director
Legal Department

STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 50 DATED JUNE 24, 2014