Regulation of the Commodity Futures Trading Regulatory Agency Number 7 of 2023 Concerning Procedures for the Implementation of Physical Market Trading of Crude Palm Oil at the Futures Exchange

REGULATION OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY NUMBER 7 OF 2023 CONCERNING PROCEDURES FOR THE IMPLEMENTATION OF PHYSICAL MARKET TRADING OF CRUDE PALM OIL AT THE FUTURES EXCHANGE BY THE GRACE OF THE MOST HIGH GOD

HEAD OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY,

Considering:
a. that in order to realize the orderly, fair, efficient, and effective implementation of Physical Market Trading of Crude Palm Oil at the Futures Exchange, as well as to ensure legal certainty in such trading, regulations governing the implementation of Physical Market Trading of Crude Palm Oil at the Futures Exchange are necessary; 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 Procedures for the Implementation of Physical Market Trading of Crude Palm Oil at the Futures Exchange;

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 (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 Gazette of the Republic of Indonesia Year 2022 Number 492);
6. Commodity Futures Trading Regulatory Agency Regulation Number 2 of 2019 concerning the Implementation of Physical Commodity Markets at Futures Exchanges as amended by Commodity Futures Trading Regulatory Agency Regulation Number 10 of 2019;

DECIDING:

To Establish: A REGULATION OF THE COMMODITY FUTURES TRADING REGULATORY AGENCY CONCERNING PROCEDURES

CHAPTER I
GENERAL PROVISIONS

Section One
Definitions

Article 1
In this Regulation of the Commodity Futures Trading Regulatory Agency, the following terms are defined as:

1. Commodity Futures Trading Regulatory Agency, hereinafter referred to as Bappebti, is a government agency whose main duties are to conduct guidance, regulation, development, and supervision of Futures Trading.
2. Futures Exchange is a business entity that organizes and provides systems and/or facilities for commodity trading activities based on Futures Contracts, Sharia Derivative Contracts, and/or other Derivative Contracts.
3. Crude Palm Oil Physical Market Futures Exchange, hereinafter referred to as CPO Exchange, is a part of the Futures Exchange that has obtained approval from Bappebti to organize Physical Market Trading of Crude Palm Oil.
4. Crude Palm Oil Physical Clearing House, hereinafter referred to as CPO Clearing House, is a Futures Clearing House that has a cooperation agreement with the CPO Exchange to carry out clearing and/or guaranteeing the settlement of transactions in the context of Physical Market Trading of Crude Palm Oil at the CPO Exchange.
5. Crude Palm Oil, hereinafter referred to as CPO, is raw palm oil obtained from the extraction of palm fruit flesh that has not undergone purification.
6. Crude Palm Oil Physical Market, hereinafter referred to as Physical CPO Market, is the Physical Market for Crude Palm Oil conducted using electronic facilities facilitated and/or organized by the CPO Exchange for CPO buy or sell transactions.
7. CPO Physical Contract, hereinafter referred to as CPO Physical Contract, is a standard contract form for selling or buying CPO at the CPO Exchange with physical delivery settlement of CPO.
8. Seller Participant at the CPO Exchange, hereinafter referred to as Seller Participant, is a party acting as a seller of CPO at the CPO Exchange that meets the requirements established by the CPO Exchange, holding the status of both a CPO Exchange Participant and a CPO Clearing House Participant.
9. Buyer Participant at the CPO Exchange, hereinafter referred to as Buyer Participant, is a party acting as a buyer of CPO at the CPO Exchange that meets the requirements established by the CPO Exchange, holding the status of both a CPO Exchange Participant and a CPO Clearing House Participant.
10. Storage Facility Manager is a party that manages the physical storage of CPO recommended by the CPO Exchange and cooperates with the CPO Clearing House to perform storage, maintenance, supervision, and/or physical delivery of CPO to Buyer Participants in accordance with the CPO Physical Contract.
11. CPO Warehouse Receipt is a document issued by the Storage Facility Manager as proof of ownership of CPO stored by the Seller Participant.
12. Storage Facility is a facility consisting of Crude Palm Oil tanks used as storage for Crude Palm Oil managed by the Storage Facility Manager.
13. Delivery Location is a location or place designated by the CPO Exchange and the CPO Clearing House or based on an agreement between the Buyer Participant and the Seller Participant for the physical handover of CPO.
14. Handover Minutes (BAST) is a document serving as proof of physical receipt of CPO.
15. CPO Transaction Guarantee, hereinafter referred to as Transaction Guarantee, is a CPO Warehouse Receipt, cash, securities, and/or other guarantees that must be placed and/or handed over by the Buyer Participant and/or Seller Participant to the CPO Clearing House as a guarantee for the implementation of Physical CPO Market transactions at the CPO Exchange.
16. CPO Purchase Proof from the CPO Exchange, hereinafter referred to as BPC, is a document issued by the CPO Exchange as proof of CPO purchase in the Physical CPO Market.
17. Trading Day is a working day of the Exchange from Monday to Friday, excluding official holidays established by the Government.
18. Surveyor is a survey company authorized by the Ministry of Trade to conduct verification or inspection of the quality of Crude Palm Oil.
19. CPO Delivery Instruction is a document issued by the CPO Clearing House as the basis for the Storage Facility Manager to release and/or move the physical CPO traded at the CPO Exchange from the storage facility to the Delivery Location.

Article 2
Physical CPO Market trading at the Futures Exchange may only be organized through a Futures Exchange that has obtained approval from Bappebti as a CPO Exchange.

Article 3
Physical CPO Market trading as referred to in Article 2 must observe:
a. good corporate governance principles, prioritizing the interests of Seller Participants and Buyer Participants to obtain fair prices and quality guarantees in accordance with regulations; and b. the purpose of establishing the Physical CPO Market to serve as an international and domestic CPO price reference and to optimize state revenue contributions and the development of domestic downstream industries.

Section Two
Quality and Status of CPO

Article 4
(1) CPO traded in the Physical CPO Market must meet quality requirements including:
a. free fatty acid content; and b. moisture and impurities levels.
(2) In addition to observing the requirements referred to in paragraph (1), if necessary, the CPO Exchange may establish additional requirements, including the Deterioration of Bleachability Index (DOBI). (3) Quality requirements as referred to in paragraph (1) and paragraph (2) are further regulated in the regulations and house rules of the Physical CPO Market at the CPO Exchange and the specifications of the CPO Physical Contract. (4) Seller Participants must act in good faith in conducting Physical CPO Market trading by guaranteeing that the CPO traded meets the quality specifications established in the CPO Physical Contract and is fully owned by the Seller Participant.

Section Three
Types of CPO Physical Contracts

Article 5
(1) CPO Physical Contracts may only be traded at the CPO Exchange after obtaining approval from Bappebti.
(2) CPO Physical Contracts consist of:
a. CPO Physical Contracts with immediate delivery; and/or b. CPO Physical Contracts with deferred delivery.
(3) CPO Physical Contracts with immediate delivery as referred to in paragraph (2) letter a have the following characteristics:
a. the CPO traded is available at the Storage Facility, evidenced by a CPO Warehouse Receipt issued by the Storage Facility Manager; and/or b. physical delivery is carried out immediately, no later than 10 (ten) working days from the date of the transaction based on an agreement between the Seller Participant and the Buyer Participant, regulated in the regulations and house rules of the Physical CPO Market at the CPO Exchange; (4) CPO Physical Contracts with deferred delivery as referred to in paragraph (2) letter b have the following characteristics:
a. they specify the amount of Transaction Guarantee in the form of cash, securities, and/or other guarantees that must be placed and/or handed over by the Seller Participant and Buyer Participant to the CPO Clearing House as a guarantee for the implementation of Physical CPO Market transactions at the CPO Exchange; and/or b. physical delivery is carried out within a specific period after the current month up to a maximum of 60 (sixty) working days from the date of the transaction based on an agreement between the Seller Participant and the Buyer Participant, regulated in the regulations and house rules of the Physical CPO Market at the CPO Exchange. (5) Specifications of the CPO Physical Contract as referred to in paragraph (1), including amendments, must be submitted by the CPO Exchange to Bappebti for approval.

Section Four
Prices and Transaction Guarantees

Article 6
(1) In Physical CPO Market trading, the CPO Exchange calculates:
a. Transaction Price; b. Session Closing Price; and
c. Daily Closing Price.
(2) Provisions regarding prices as referred to in paragraph (1), procedures for price submission, and amendments are further regulated in the regulations and house rules of the Physical CPO Market at the CPO Exchange.

Article 7
(1) Transaction Guarantees in the implementation of Physical CPO Market trading at the CPO Exchange may be in the form of:
a. CPO Warehouse Receipt; b. cash and/or securities placed in a separate account owned by the CPO Clearing House; and/or
c. other guarantees further determined in the regulations and house rules of the Physical CPO Market at the CPO Clearing House.
(2) Transaction Guarantees in the form of cash as referred to in paragraph (1) letter b must be in Rupiah denomination.
(3) Seller Participants and Buyer Participants must place and/or hand over Transaction Guarantees as referred to in paragraph (1) to the CPO Clearing House before quoting sell and/or buy prices at the CPO Exchange. (4) The CPO Exchange together with the CPO Clearing House must ensure that the CPO placed by the Seller Participant at the Storage Facility managed by the Storage Facility Manager complies with the specifications of the CPO Physical Contract. (5) In order to ensure that CPO traded in the Physical CPO Market complies with the specifications of the CPO Physical Contract as referred to in paragraph (4), the CPO Exchange together with the CPO Clearing House may cooperate with a surveyor.

Article 8
(1) The CPO Exchange and the CPO Clearing House determine the amount or value of the Transaction Guarantee.
(2) In determining the amount or value of the Transaction Guarantee as referred to in paragraph (1), the CPO Clearing House and the CPO Exchange must at least consider:
a. potential commodity price risks; and b. potential market risks.
(3) Further provisions regarding the amount or value, placement mechanism, and use of Transaction Guarantees are further regulated in the regulations and house rules of the Physical CPO Market at the CPO Clearing House.

CHAPTER II
INSTITUTIONAL ARRANGEMENTS

Section One
CPO Exchange

Article 9
(1) Physical CPO Market trading at the Futures Exchange may only be organized through a Futures Exchange that has obtained approval from Bappebti as a CPO Exchange.
(2) To obtain approval as a CPO Exchange as referred to in paragraph (1), in addition to meeting requirements regulated in Bappebti Regulations governing the implementation of Physical Commodity Market trading at Futures Exchanges, the Futures Exchange must meet the following requirements:
a. hold a business license as a Futures Exchange; b. have a trading, supervision, and reporting system for the implementation of Physical CPO Market trading;
c. have a mechanism and facilities for dispute resolution;
d. have regulations and house rules for the Physical CPO Market; e. have a Physical CPO Market Committee; f. have a study on the conditions of the Physical CPO Market to be formed; and g. have cooperation, agreements, commitments, or other written statements with prospective Buyer Participants and prospective Seller Participants in the implementation of Physical CPO Market trading.

Article 10
(1) Regulations and house rules for the Physical CPO Market as referred to in Article 9 paragraph (2) letter d must at least contain:
a. requirements and procedures for acceptance as a Seller Participant or Buyer Participant of the Physical CPO Market, observing regulations set forth in this Regulation; b. rights and obligations of Seller Participants or Buyer Participants of the Physical CPO Market;
c. formulation or calculation of membership fees and other costs for services provided to Seller Participants and Buyer Participants;
d. CPO quality requirements for traded goods; e. provisions regarding the amount, value, placement mechanism, and use of Transaction Guarantees; f. transaction mechanisms and reporting of Physical CPO Market trading; g. mechanism for placing buy and sell price quotes, including amendments; h. formulation for determining CPO transaction prices;
i. supervision mechanisms for Physical CPO Market trading;
j. physical CPO delivery mechanisms; k. dispute resolution mechanisms; and
l. sanctions for violations of Physical CPO Market regulations and house rules.
(2) Regulations and house rules for the Physical CPO Market as referred to in paragraph (1), including amendments, must obtain approval from Bappebti.

Article 11
(1) To obtain approval as a CPO Exchange as referred to in Article 9 paragraph (1), the Futures Exchange must submit an application to the Head of Bappebti accompanied by documents:
a. letter of application for approval as a CPO Exchange; b. Deed of Establishment of the Limited Liability Company and its amendments, certified by the Ministry of Law and Human Rights;
c. business license as a Futures Exchange;
d. study on economic considerations and conditions of the Physical CPO Market to be formed; e. financial projections and business plan for 3 (three) years, including projections of transaction volume, number of Seller Participants, and Buyer Participants; f. Company Capital Deed certified by the Ministry of Law and Human Rights; g. organizational structure containing a special division handling Physical CPO Market trading; h. draft regulations and house rules for the Physical CPO Market;
i. draft specifications for the CPO Physical Contract;
j. written statement of readiness for hardware and software systems for trading, supervision, and reporting for the implementation of Physical CPO Market trading; k. Standard Operating Procedures regarding:
1) Seller and/or Buyer membership in the Physical CPO Market;
2) Implementation of the Physical CPO Market;
3) Recording and reporting of Physical CPO Market trading; and
4) Dispute resolution.
(2) Applications for approval as a CPO Exchange as referred to in paragraph (1) are submitted to the Head of Bappebti using Form Number CPO.1 and completed with documents required in Form Number CPO.2 as stated in the Appendix of this Regulation. (3) Bappebti conducts verification or examination of the authenticity of documents against the originals and evaluates documents as referred to in paragraph (1). (4) Bappebti conducts inspections of physical facilities and infrastructure at the Futures Exchange office and creates Inspection Minutes using Form Number II CPO.1 and Form Number II CPO.2 as stated in the Appendix of this Regulation. (5) Within 5 (five) working days after conducting verification or examination of document authenticity as referred to in paragraph (3) and inspections as referred to in paragraph (4), Bappebti provides feedback or notes to the applicant, indicating whether the results are compliant or if the applicant needs to complete the documents. (6) In the event of notes on verification results, inconsistencies in required documents, and/or missing requirements as referred to in paragraph (5), Bappebti provides a period of 5 (five) working days for the applicant to complete and/or adjust requirements since Bappebti provided feedback or notes. (7) If the applicant fails to complete and/or adjust requirements as referred to in paragraph (6) within 5 (five) working days, Bappebti submits a rejection of the application as referred to in paragraph (2). (8) Bappebti provides approval or rejection of the application as referred to in paragraph (1) no later than 3 (three) working days after all requirements are declared complete and correct. (9) Bappebti grants approval as a CPO Exchange using Form Number III CPO.1 as stated in the Appendix of this Regulation. (10) Bappebti submits rejection of the application as referred to in paragraph (1) using Form Number III CPO.2 as stated in the Appendix of this Regulation.

Article 12
In the implementation of Physical CPO Market trading, the CPO Exchange has the right to:
a. accept Seller Participants or Buyer Participants conducting Physical CPO Market trading in accordance with membership acceptance requirements and procedures; b. designate Delivery Locations as locations or places for physical CPO handover;
c. propose CPO Physical Contracts for approval from Bappebti after coordination with the Physical CPO Market Committee;
d. establish and collect membership fees and other costs for services provided to Seller Participants and Buyer Participants, considering efficiency and fairness principles, and after coordination with the Physical CPO Market Committee; e. take necessary actions to secure Physical CPO Market transactions, including preventing occurrences that reduce transparency and fairness in Physical CPO Market trading; f. impose sanctions or specific actions on Seller Participants and/or Buyer Participants for violations of regulations in the field of Commodity Futures Trading; and g. submit recommendations to Bappebti for temporary suspension in the event of conditions threatening the implementation of Physical CPO Market trading.

Article 13
(1) In the implementation of Physical CPO Market trading, the CPO Exchange must:
a. provide reliable system facilities for the orderly, transparent, and fair implementation of transactions, reporting, and supervision of the Physical CPO Market; b. ensure the quality of CPO traded in the Physical CPO Market complies with CPO Physical Contract specifications;
c. issue BPC for every transaction occurring in the CPO Exchange trading system;
d. conduct market supervision over all Physical CPO Market trading transactions at the CPO Exchange; e. provide access to reliable and real-time supervision and reporting systems to Bappebti for supervision purposes; f. take necessary steps in accordance with regulations in the field of Commodity Futures Trading to ensure the Physical CPO Market trading mechanism functions well and report to Bappebti; g. submit all reports related to Physical CPO Market trading transactions to the Head of Bappebti in accordance with regulations in the field of Commodity Futures Trading; h. form a Physical CPO Market Committee;
i. conduct audits of participants, either independently or by appointing auditors; and
j. submit reports of any violations of regulations in the field of Commodity Futures Trading, Physical CPO Market regulations and house rules at the CPO Exchange, and/or imposition of sanctions in the implementation of Physical CPO Market trading to Bappebti. (2) In order to ensure the quality of CPO traded in the Physical CPO Market complies with CPO Physical Contract specifications as referred to in paragraph (1) letter b, the CPO Exchange:
a. conducts checks on CPO quality; and/or b. accepts statements from Seller Participants, the substance of which is determined in Article 18 paragraph (2).
(3) Further provisions regarding reports as referred to in paragraph (1) letter g are regulated in a Circular Letter from the Head of Bappebti.

Section Two
CPO Clearing House

Article 14
(1) The clearing and/or guaranteeing of settlement processes for Physical CPO Market trading transactions at the CPO Exchange may only be conducted by a Futures Clearing House that has a cooperation agreement with the CPO Exchange to carry out clearing and/or guaranteeing of transaction settlements in the context of Physical CPO Market trading. (2) To carry out the clearing and/or guaranteeing of settlement processes for Physical CPO Market trading transactions at the CPO Exchange, in addition to meeting requirements regulated in Bappebti Regulations governing the implementation of Physical Commodity Market trading at Futures Exchanges, the Futures Clearing House must meet the following requirements:
a. hold a business license as a Futures Clearing House; b. have sufficient systems in the clearing and/or guaranteeing of settlement processes for Physical CPO Market trading; and
c. have regulations and house rules for the Physical CPO Market; and
d. have an organizational structure containing a division handling clearing and/or guaranteeing of settlement for Physical CPO Market trading.
(3) Requirements for Futures Clearing Houses to carry out the clearing and/or guaranteeing of settlement processes for Physical CPO Market trading transactions at the CPO Exchange are further regulated...