Regulation of the Commodity Futures Trading Regulatory Agency Number 6 of 2023 Concerning Amendments to the Head of the Commodity Futures Trading Regulatory Agency Regulation Number 5 of 2017 Concerning Alternative Trading Systems

REGULATION OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY OF THE REPUBLIC OF INDONESIA NUMBER 6 OF 2023 CONCERNING AMENDMENTS TO THE HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY REGULATION NUMBER 5 OF 2017 CONCERNING ALTERNATIVE TRADING SYSTEMS BY THE GRACE OF GOD THE ALMIGHTY HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY OF THE REPUBLIC OF INDONESIA,

Considering:
a. that in order to increase transparency in the implementation of the Alternative Trading System and to further strengthen Client protection, the provisions regarding the implementation of the Alternative Trading System need to be changed and adjusted; b. that based on the considerations referred to in letter a, it is necessary to establish a Regulation of the Commodity Futures Trading Regulatory Agency concerning Amendments to the Head of the Commodity Futures Trading Regulatory Agency Regulation Number 5 of 2017 concerning the Alternative Trading System;

Recalling:

1. Law Number 32 of 1997 concerning Commodity Futures Trading (State Gazette of the Republic of Indonesia Year 1997 Number 93, Supplement to the State Gazette of the Republic of Indonesia Number 3720) as amended by Law Number 10 of 2011 concerning Amendments to Law Number 32 of 1997 concerning Commodity Futures Trading (State Gazette of the Republic of Indonesia Year 2011 Number 79, Supplement to the State Gazette of the Republic of Indonesia Number 5232);
2. Government Regulation Number 49 of 2014 concerning the Implementation of Commodity Futures Trading (State Gazette of the Republic of Indonesia Year 2014 Number 143, Supplement to the State Gazette of the Republic of Indonesia Number 5548);
3. Presidential Regulation Number 68 of 2019 concerning the Organization of State Ministries (State Gazette of the Republic of Indonesia Year 2019 Number 203) as amended by Presidential Regulation Number 32 of 2021 concerning Amendments to Presidential Regulation Number 68 of 2019 Concerning the Organization of State Ministries (State Gazette of the Republic of Indonesia Year 2021 Number 106);
4. Presidential Regulation Number 11 of 2022 concerning the Ministry of Trade (State Gazette of the Republic of Indonesia Year 2022 Number 19);
5. Minister of Trade Regulation Number 29 of 2022 concerning the Organization and Work Structure of the Ministry of Trade (State News of the Republic of Indonesia Year 2022 Number 492);
6. Head of the Commodity Futures Trading Regulatory Agency Regulation Number 5 of 2017 concerning the Alternative Trading System (State News of the Republic of Indonesia Year 2017 Number 719);

DECIDES:
Establishing: A REGULATION OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY CONCERNING AMENDMENTS TO THE HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY REGULATION NUMBER 5 OF 2017 CONCERNING THE ALTERNATIVE TRADING SYSTEM.

Article I
Several provisions in the Head of the Commodity Futures Trading Regulatory Agency Regulation Number 5 of 2017 concerning the Alternative Trading System are amended as follows:

1. Article 5 provisions are amended, so that they read as follows:
   Article 5
   (1) The implementation of activities as an Alternative Trading System Organizer can only be carried out by a Futures Trader who has obtained approval from the Head of Bappebti.
   (2) Approval as an Alternative Trading System Organizer can only be granted to a Futures Trader meeting the following requirements:
   a. being a limited liability company and a Member of the Futures Exchange and a Member of the Futures Clearing House; b. having paid-up capital of at least Rp40,000,000,000.00 (forty billion rupiah) accompanied by documents as proof of ownership and placement of company capital;
   c. maintaining equity of at least Rp35,000,000,000.00 (thirty-five billion rupiah);
   d. submitting financial reports on capital balances as referred to in letter b which have been audited by a public accountant who has obtained licensing from the Ministry of Finance; e. having sufficient facilities to ensure orderly, fair, efficient, effective, and transparent transactions; f. in addition to having trading systems and/or facilities meeting the requirements as regulated in the Commodity Futures Trading Regulatory Agency Regulation concerning trading systems in alternative trading system transactions, the trading systems and/or facilities must also have at least the following features and capabilities:
   1) connected at all times with the Futures Exchange to present bid and/or ask price quotations for every Derivative Contract other than Futures Contracts and Sharia Derivative Contracts traded online and in real-time;
   2) accurate, current, secure, trusted, online, and real-time;
   3) holding an ISO 27001 (Information Security Management System) certificate which includes a Statement of Applicability (SOA) for ISO 27017 (cloud security) and ISO 27018 (cloud privacy) that is still valid;
   4) the scope of ISO as referred to in number 3 (three) covers the transaction execution process;
   5) the ISO certificate as referred to in number 3 (three) can only be issued by a certification body recognized by the government agency handling information security affairs;
   6) capable of storing transaction data, financial data, and transaction price history logs for the last 5 (five) consecutive years; and
   7) transaction data, financial data, and transaction price history logs as referred to in number 6 (six) must be copied and stored to data storage media outside the trading system and/or facilities database after passing the 5 (five) year period.
   g. having a Cooperation Agreement with at least 1 (one) Alternative Trading System Participant whose form and content are guided by Form Number I.SPA.1 as contained in the Appendix of this Agency Regulation; h. creating Trading Rules used by Alternative Trading System Participants;
   i. obtaining recommendations from the Futures Exchange and the Futures Clearing House;
   j. the board of directors, board of commissioners, shareholders, and Controllers of prospective Alternative Trading System Organizers must pass the fit and proper test from the Futures Exchange and Bappebti; and k. having a board of directors and board of commissioners where 2/3 (two-thirds) of each board of directors and board of commissioners must have Indonesian Citizen (WNI) status. (3) The form and content of Trading Rules as referred to in paragraph (2) letter h must at least regulate the following matters:
   a. maximum lot for each Client instruction that can be fulfilled by the Alternative Trading System Organizer, with the maximum lot provision set at no more than 50 (fifty) lots; b. inclusion of price reference provider information and price sources used in setting quotations and quotation setting formulas;
   c. maximum spread between bid and offer offered by the Alternative Trading System Organizer in normal market conditions;
   d. explanation of the spread between bid and offer offered by the Alternative Trading System Organizer in hectic market conditions; e. explanation regarding hectic conditions, namely situations that must meet at least one of the following situations, and not caused by wrong quotes, as follows:
   1) bid or offer exists on only one side;
   2) spread between bid and offer exceeds the normal spread determined by the Alternative Trading System Organizer; and/or
   3) price fluctuation occurs by more than 30 (thirty) points, there is political, economic, terrorism, natural disaster news, and other matters affecting financial market conditions.
   f. risk management according to the category of Client acceptance, at least regulating and setting the minimum size of Initial Margin, maintenance Margin, variation Margin of Client transactions, and the authority to conduct liquidation; g. the number of open positions for Client instructions with electronic online Client acceptance mechanism using Simple Customer Due Diligence (CDD) allowed at most 1 (one) lot during transaction execution for each Client account; h. types of instructions that can be served;
   i. automatic position extension facilities and costs arising from such facilities;
   j. time delay (delay) of at most 4 (four) seconds that may occur in the trading system in processing Client orders from order receipt until order response by the Alternative Trading System Organizer's trading system, in the event the transaction execution method chosen by the Client is instant execution; k. prohibition of order splitting for every 1 (one) transaction click performed by the Client;
   l. prohibition of rejection by the Alternative Trading System Organizer for Client orders other than rejection for orders exceeding the permitted maximum lot;
   m. inclusion of the transaction execution method chosen by the Client in 1 (one) Client account, including:
   1) instant execution method, with the following provisions:
   a) execution time of at most 4 (four) seconds from order receipt until order response by the Alternative Trading System Organizer's trading system; b) price requote may occur; and c) price determined by the Alternative Trading System Organizer.
   2) market execution method, with the following provisions:
   a) execution time of at most 1 (one) second from order receipt until order response by the Alternative Trading System Organizer's trading system; b) no requote; and c) resulting price matches market price and within a reasonable range. n. provisions regulating price requote for the instant execution transaction method, which may occur if the quotation price provided by the Alternative Trading System Organizer Trader does not match the price requested by the Client, with the provisions:
   1) the Alternative Trading System Organizer can only provide price requote based on reference price and price formula stated in the Trading Rules; and
   2) the Alternative Trading System Organizer must provide the Client with the option to set up the trading system, with choices:
   a) Client agrees with the setup previously performed by the Alternative Trading System Organizer; or b) Client agrees with the determination of the price stated according to the Alternative Trading System Organizer's quotation; o. designation of one Futures Exchange as the transaction reporting place and one Futures Clearing House as the transaction registration place; and p. trading hours for each traded contract. (4) In the event the prospective Alternative Trading System Organizer has 2 (two) memberships in the Futures Exchange and Futures Clearing House, the recommendation as referred to in paragraph (2) letter i must be obtained from each Futures Exchange and Futures Clearing House. (5) In the event the prospective Alternative Trading System Organizer has 2 (two) memberships in the Futures Exchange, the board of directors, board of commissioners, shareholders, and controllers of the prospective Alternative Trading System Organizer as referred to in paragraph (2) letter j must pass the fit and proper test from each Futures Exchange. (6) In the event of a discrepancy between the execution of one transaction and the Trading Rules caused by the Alternative Trading System Organizer's error, the Alternative Trading System Organizer must restore the erroneous transaction to its original state. (7) The Alternative Trading System Organizer must use the dispute resolution mechanism provided at the Alternative Trading System Participant and/or at the Futures Exchange if there is a complaint from a Client regarding alleged violations of the Trading Rules. (8) The Alternative Trading System Organizer must submit to the Alternative Trading System Participant and/or the Futures Exchange data and information needed, including transaction data, financial data, and transaction price history logs of the trading system, related to the dispute resolution process as referred to in paragraph (7). (9) The Trading Rules as referred to in paragraph (2) letter h and their amendments must be reviewed by the Futures Exchange and subsequently submitted by the Futures Exchange to Bappebti for approval. (10) In the event the prospective Alternative Trading System Organizer has more than 1 (one) membership in the Futures Exchange, the Trading Rules as referred to in paragraph (2) letter h must be reviewed by each Futures Exchange. (11) The Alternative Trading System Organizer must maintain Margin as a guarantee for Derivative Contract transactions other than Futures Contracts and Sharia Derivative Contracts at each membership in the Futures Clearing House at 200% (two hundred percent) of the initial margin value or initial margin for its open positions. (12) Margin as referred to in paragraph (11) is at least Rp8,000,000,000.00 (eight billion rupiah).

2. Article 8 provisions are amended, so that they read as follows:
   Article 8
   (1) The application for approval as an Alternative Trading System Organizer is submitted to the Head of Bappebti using Form Number I.SPA.2 and completed with documents required in Form Number I.SPA.2.A, I.SPA.2.B, I.SPA.2.C, I.SPA.2.D, I.SPA.2.E, I.SPA.2.F, I.SPA.2.G as contained in the Appendix of this Agency Regulation. (2) Bappebti conducts verification or examination of the authenticity of documents according to the original and assessment of documents as referred to in paragraph (1). (3) Bappebti conducts fit and proper test interviews regarding ethics, morality, knowledge in Commodity Futures Trading, Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regarding the board of directors, board of commissioners, shareholders, and controllers of prospective Alternative Trading System Organizers as a completeness of the licensing process after the provisions as referred to in paragraph (2) are met. (4) In the event the controller, shareholder, and/or beneficial owner of the Alternative Trading System Organizer is a non-individual entity, Bappebti conducts clarification tracing of related parties up to at least the second degree, and may request recommendations or clarifications from the party granting licensing to the controller, shareholder, and/or beneficial owner of the Alternative Trading System Organizer in the form of a non-individual entity. (5) Bappebti conducts examination of physical facilities and infrastructure at the prospective Alternative Trading System Organizer's office guided by company completeness information using Form Number I.SPA.2.G and creates an examination report using Form Number I.SPA.3 as contained in the Appendix of this Agency Regulation. (6) Within 7 (seven) working days after conducting verification or examination of document authenticity as referred to in paragraph (2) and examination as referred to in paragraph (5), Bappebti provides feedback or notes to the applicant, namely the result is compliant or still needs to be completed by the applicant. (7) Results that still need to be completed by the applicant as referred to in paragraph (6) must be completed and/or report the progress of requirement completeness fulfillment within a maximum period of 7 (seven) working days since Bappebti provided feedback or notes. (8) Applicants who have not been able to complete and/or do not report the progress of requirement completeness fulfillment within the period as referred to in paragraph (7) will have Bappebti reject the application as referred to in paragraph (1). (9) Bappebti provides approval for the application as referred to in paragraph (1) at the latest 7 (seven) working days after all requirements are declared complete and correct. (10) Bappebti provides approval for the application as referred to in paragraph (1) using Form Number I.SPA.4 as contained in the Appendix of this Agency Regulation. (11) Bappebti conveys rejection of the application as referred to in paragraph (1) using Form Number
   I.SPA.5 as contained in the Appendix of this Agency Regulation.

3. Paragraph (3), paragraph (6), and paragraph (7) of Article 9 are amended and between paragraph (4) and paragraph (5) of Article 9, 1 (one) paragraph is inserted, namely paragraph (4a), so that Article 9 reads as follows:
   Article 9
   (1) Plans for changes to the board of directors members, board of commissioners members, shareholders, and/or controllers of the Alternative Trading System Organizer must obtain recommendations from the Futures Exchange based on the results of fit and proper test interviews, before being submitted for approval from the Head of Bappebti. (2) In the event the Alternative Trading System Organizer has 2 (two) memberships in the Futures Exchange, the recommendation as referred to in paragraph (1) must be obtained from each Futures Exchange. (3) Applications for changes to the board of directors members, board of commissioners members, shareholders, and/or controllers of the Alternative Trading System Organizer as referred to in paragraph (1) are submitted to the Head of Bappebti using Form Number I.SPA.6 and completed with documents required in Form Number I.SPA.2.A, I.SPA.2.B, I.SPA.2.E, and I.SPA.2.F as contained in the Appendix of this Agency Regulation. (4) Bappebti conducts fit and proper test interviews regarding ethics, morality, and knowledge in Commodity Futures Trading, Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regarding the board of directors members, board of commissioners members, shareholders, and/or controllers of the Alternative Trading System Organizer as referred to in paragraph (1). (4a) In the event the controller, shareholder, and/or beneficial owner of the Alternative Trading System Organizer is a non-individual entity, Bappebti conducts clarification tracing of related parties up to the second degree, and may request recommendations or clarifications from the party granting licensing to the controller, shareholder, and/or beneficial owner of the Alternative Trading System Organizer in the form of a non-individual entity. (5) Bappebti provides approval or rejection for the application as referred to in paragraph (1) at the latest 20 (twenty) working days after requirement completeness is fulfilled. (6) Bappebti provides approval for the application as referred to in paragraph (3) using Form Number I.SPA.7 as contained in the Appendix of this Agency Regulation. (7) Bappebti conveys rejection of the application as referred to in paragraph (3) using Form Number I.SPA.5 as contained in the Appendix of this Agency Regulation.

4. Article 11 provisions are amended, so that they read as follows:
   Article 11
   (1) The Alternative Trading System Organizer must report every transaction of Derivative Contracts other than Futures Contracts and Sharia Derivative Contracts to the Futures Exchange for electronic market supervision using Form Number I.SPA.10 as contained in the Appendix of this Agency Regulation. (2) The Alternative Trading System Organizer must register every transaction of Derivative Contracts other than Futures Contracts and Sharia Derivative Contracts with the Futures Clearing House for electronic settlement guarantee using Form Number I.SPA.11 as contained in the Appendix of this Agency Regulation. (3) The Alternative Trading System Organizer must at all times submit ask and/or bid price quotations for every Derivative Contract other than Futures Contracts and Sharia Derivative Contracts traded to the Futures Exchange via the official Futures Exchange website in real-time for public access at all times.

5. Article 13 provisions are amended, so that they read as follows:
   Article 13
   (1) The implementation of activities as an Alternative Trading System Participant can only be carried out by a Futures Broker who has obtained approval from the Head of Bappebti.
   (2) Approval as an Alternative Trading System Participant can only be granted to a Futures Broker meeting the following requirements:
   a. being a limited liability company and a Member of the Futures Exchange and a Member of the Futures Clearing House; b. having paid-up capital of at least Rp30,000,000,000.00 (thirty billion rupiah) accompanied by documents as proof of ownership and placement of company capital;
   c. the Alternative Trading System Participant must maintain equity of at least Rp25,000,000,000.00 (twenty-five billion rupiah);
   d. having facilities and using systems that support orderly, fair, efficient, effective, and transparent trading; e. obtaining recommendations from the Futures Exchange and the Futures Clearing House; f. the board of directors, board of commissioners, shareholders, and controllers of prospective Alternative Trading System Participants must pass the fit and proper test from the Futures Exchange and Bappebti; and g. having at least 3 (three) board of directors members, one of whom holds the position of Compliance Director, and 2 (two) board of commissioners members, with 2/3 (two-thirds) of each board of directors and board of commissioners having Indonesian Citizen (WNI) status. (3) In conducting business activities, the Alternative Trading System Participant must have at least the following functions and features:
   a. applying the Know Your Customer (KYC), Customer Due Diligence (CDD), and/or Enhanced Due Diligence (EDD) principles with the following provisions:
   1) based on Regulatory Technology (Regtech) with qualification criteria using face recognition with liveness features integrated with biometric data; and
   2) having a cooperation agreement with the ministry handling administrative population data tasks and functions to utilize administrative population data in accordance with statutory regulations.
   b. holding a valid ISO 27001 (Information Security Management System) certificate;
   c. the scope of ISO as referred to in letter b covers the Client acceptance process and transaction execution;
   d. the ISO certificate as referred to in letter b can only be issued by a certification body recognized by the government agency handling information security affairs;