SEOJK on the Implementation of Face-to-Face Meetings in Receiving Mutual Fund Holders via Electronic Account Opening, and Procedures for Electronic Subscription and Redemption of Mutual Fund Securities

To:

1. Investment Managers;
2. Mutual Fund Selling Agents;
3. Custodian Banks;
4. Indonesia Mutual Fund Management Association; and
5. Indonesia Custodian Bank Association;
   At their respective locations.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 7/SEOJK.04/2014

CONCERNING

THE IMPLEMENTATION OF FACE-TO-FACE MEETINGS
IN RECEIVING MUTUAL FUND HOLDERS THROUGH
ELECTRONIC ACCOUNT OPENING, AS WELL AS PROCEDURES FOR ELECTRONIC SALE (SUBSCRIPTION) AND REDEMPTION OF MUTUAL FUND SECURITIES

In order to implement Bapepam and LK Regulation Number IV.B.1, Appendix of the Chairman of Bapepam and LK Decision Number: KEP-552/BL/2010 dated 30 December 2010 concerning Guidelines for the Management of Mutual Funds in the Form of Collective Investment Contracts, Bapepam Regulation Number IV.A.3, Appendix of the Chairman of Bapepam Decision Number: Kep-13/PM/2002 dated 14 August 2002 concerning Guidelines for the Management of Mutual Funds in the Form of Companies, and Bapepam and LK Regulation Number V.D.10, Appendix of the Chairman of Bapepam and LK Decision Number: KEP-476/BL/2009 dated 23 December 2009 concerning Principles of Knowing the Customer by Financial Service Providers in the Capital Market, as well as to increase the number and expand the investor base of Mutual Funds, the Financial Services Authority needs to regulate the Implementation of Face-to-Face Meetings in Receiving Mutual Fund Holders through Electronic Account Opening, as well as Procedures for Electronic Sale (Subscription) and Redemption of Mutual Fund Securities in a Circular Letter of the Financial Services Authority as follows:

I. GENERAL PROVISIONS

1. In this Circular Letter of the Financial Services Authority, the following terms are defined as:
   a. General Bank is a General Bank as referred to in Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking, and has a cooperation agreement with the Investment Manager containing provisions:

1. in implementing the principle of knowing the customer, the General Bank has conducted face-to-face meetings with prospective Mutual Fund Holders; and
2. the Investment Manager may use such face-to-face meetings as part of the implementation of the principle of knowing the customer conducted by it.
   b. Mutual Fund Selling Agent is a Mutual Fund Selling Agent as referred to in Bapepam and LK Regulation Number V.B.3, Appendix of the Chairman of Bapepam and LK Decision Number: KEP-10/BL/2006 dated 30 August 2006 concerning Registration of Mutual Fund Selling Agents, which conducts Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities.
   c. Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities are transactions for the sale (subscription) and/or redemption (redemption) of Mutual Fund Securities through electronic media, including but not limited to the internet or other electronic media, where transaction proofs are provided by the Investment Manager in printed form (hard copy) and/or in electronic document form (soft copy) that can be printed.

2. Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities must comply with:
   a. Law Number 11 of 2008 concerning Electronic Information and Transactions and its implementing regulations; b. Bapepam Regulation Number IV.A.3, Appendix of the Chairman of Bapepam Decision Number: Kep-13/PM/2002 dated 14 August 2002 concerning Guidelines for the Management of Mutual Funds in the Form of Companies;
   c. Bapepam and LK Regulation Number IV.B.1, Appendix of the Chairman of Bapepam and LK Decision Number: KEP-552/BL/2010 dated 30 December 2010 concerning Guidelines for the Management of Mutual Funds in the Form of Collective Investment Contracts;
   d. Bapepam Regulation Number IV.A.5, Appendix of the Chairman of Bapepam Decision Number: Kep-21/PM/1996 dated 17 January 1996, concerning Guidelines for Custody Agreements for Mutual Funds in the Form of Companies; e. Bapepam Regulation Number IV.A.4, Appendix of the Chairman of Bapepam Decision Number: Kep-14/PM/2002 dated 14 August 2002, concerning Guidelines for Management Agreements for Mutual Funds in the Form of Companies; f. Bapepam and LK Regulation Number IV.B.2, Appendix of the Chairman of Bapepam and LK Decision Number: KEP-553/BL/2010 dated 30 December 2010 concerning Guidelines for Mutual Fund Agreements in the Form of Collective Investment Contracts; g. Bapepam Regulation Number IV.D.2, Appendix of the Chairman of Bapepam Decision Number: Kep-20/PM/2004 dated 29 April 2004, concerning Mutual Fund Investor Profiles; h. Bapepam and LK Regulation Number V.D.10, Appendix of the Chairman of Bapepam and LK Decision Number: Kep-476/BL/2009 dated 23 December 2009 concerning Principles of Knowing the Customer by Financial Service Providers in the Capital Market;
   i. Bapepam and LK Regulation Number IV.C.2, Appendix of the Chairman of Bapepam and LK Decision Number: Kep-367/BL/2012 dated 9 July 2012 concerning Fair Market Value of Securities in Mutual Fund Portfolios;
   j. Bapepam and LK Regulation Number IV.C.3, Appendix of the Chairman of Bapepam and LK Decision Number: Kep-516/BL/2012 dated 21 September 2012 concerning Guidelines for Daily Announcements of Net Asset Value of Open-End Mutual Funds; k. Bapepam and LK Regulation Number IV.C.4, Appendix of the Chairman of Bapepam and LK Decision Number: Kep-262/BL/2011 dated 31 May 2011 concerning Guidelines for the Management of Mutual Funds...

Protected Mutual Funds, Guaranteed Mutual Funds, and Index Mutual Funds; and
l. Bapepam and LK Regulation Number V.B.4, Appendix of the Chairman of Bapepam and LK Decision Number: Kep-11/BL/2006 dated 30 August 2006 concerning Conduct of Mutual Fund Selling Agents.

II. IMPLEMENTATION OF FACE-TO-FACE MEETINGS IN RECEIVING MUTUAL FUND HOLDERS THROUGH ELECTRONIC ACCOUNT OPENING

1. The implementation of face-to-face meetings in receiving Mutual Fund Holders through electronic account opening using systems provided by the Investment Manager is subject to the following provisions:
   a. The Investment Manager may use face-to-face meetings already conducted by General Banks and/or Mutual Fund Selling Agents. b. The implementation of the principle of knowing the customer regarding face-to-face meetings as referred to in letter a is established by and under the coordination of the Investment Manager.
   c. The Investment Manager must:

1. be responsible for the implementation of the principle of knowing the customer regarding face-to-face meetings already conducted by General Banks and/or Mutual Fund Selling Agents with prospective Mutual Fund Holders;
2. ensure that information, data, and/or documents sent electronically by prospective Mutual Fund Holders are correct from the prospective Mutual Fund Holders who conducted face-to-face meetings with General Banks and/or Mutual Fund Selling Agents; and
3. ensure that transactions conducted electronically by Mutual Fund Holders are correct from the Mutual Fund Holders who conducted face-to-face meetings with General Banks and/or Mutual Fund Selling Agents.

2. The implementation of face-to-face meetings in receiving Mutual Fund Holders through electronic account opening using systems provided by Mutual Fund Selling Agents may be conducted by Mutual Fund Selling Agents based on:
   a. face-to-face meetings conducted by themselves; or b. face-to-face meetings conducted by General Banks.

III. PROCEDURES FOR ELECTRONIC SALE (SUBSCRIPTION) AND REDEMPTION (REDEMPTION) OF MUTUAL FUND SECURITIES

1. Investment Managers may conduct Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities, provided that the Investment Manager must first:
   a. have an Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities system; b. include procedures for Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities in the Collective Investment Contract and/or Prospectus; and
   c. obtain approval from the Financial Services Authority.

2. Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities as referred to in item 1 may be conducted by Mutual Fund Selling Agents.

3. The Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities system as referred to in item 1 letter a must provide electronic information for investors, which must contain at least:
   a. the latest electronic Prospectus with content identical to the printed Prospectus; and b. procedures for Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities.

4. Electronic Information and Prospectus as referred to in item 3 must at least:
   a. use the Indonesian language and may be accompanied by translations in foreign languages; and b. present information, data, and/or documents that are easy to understand and communicative.

5. The electronic system used by the Investment Manager or Mutual Fund Selling Agent in conducting Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities must at least:
   a. be free from the possibility of being accessed by unauthorized persons; b. be tested for reliability;
   c. provide an audit trail for all Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities activities for supervision, law enforcement, dispute resolution, verification, testing, and other examinations; and
   d. have obtained a recommendation from the competent institution, as referred to in Law Number 11 of 2008 concerning Electronic Information and Transactions and its implementing regulations.

6. Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities may only be conducted if the investor already has a Mutual Fund Securities account and is registered to conduct Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities on the system provided by the Investment Manager or Mutual Fund Selling Agent.

7. The Investment Manager or Mutual Fund Selling Agent organizing Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities transactions must ensure that the investor has registered in the electronic system provided by them.

8. For the registration as referred to in item 7, the investor must fill in investor data in the electronic system application provided by the Investment Manager or Mutual Fund Selling Agent and submit supporting documents to obtain user identity and password as access to conduct Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities.

9. The Investment Manager or Mutual Fund Selling Agent organizing Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities transactions must verify that the data submitted electronically by the investor matches the supporting documents.

10. In the event that the verification results as referred to in item 9 match the supporting documents, the Investment Manager or Mutual Fund Selling Agent must provide the user identity and password to the investor.

11. The Investment Manager or Mutual Fund Selling Agent must provide security systems for every Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities transaction conducted by the Mutual Fund Securities account holder.

12. In the event that the verification of electronic information and supporting documents as referred to in item 9 is conducted by the Mutual Fund Selling Agent, then:
    a. The Mutual Fund Selling Agent must submit the investor's electronic information and supporting documents to the Investment Manager; and b. The Investment Manager must ensure that the electronic information and supporting documents submitted by the Mutual Fund Selling Agent as referred to in letter a are the same as the electronic information and supporting documents submitted by the investor to the Mutual Fund Selling Agent.

13. The implementation of Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities conducted by Mutual Fund Selling Agents must be carried out under the coordination of the Investment Manager.

14. Mutual Fund Selling Agents organizing Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities must provide information and documents of Mutual Fund Holders to the Investment Manager, with the provision that all information and documents of Mutual Fund Holders may only be used for Mutual Fund activity purposes.

15. Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities transactions may only be conducted by investors after:
    a. having a Mutual Fund Securities account; b. registering to conduct electronic purchase or sale of Mutual Fund Securities; and
    c. obtaining user identity, password, and security systems for every electronic transaction from the Investment Manager or Mutual Fund Selling Agent.

16. The Investment Manager or Mutual Fund Selling Agent conducting Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities must submit all documents related to Mutual Fund Holder transactions to the Custodian Bank that holds the Mutual Fund assets.

17. The Custodian Bank administering Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities must:
    a. store all documents and Mutual Fund assets; b. issue written confirmations of sale (subscription) and redemption (redemption) of Mutual Fund Securities;
    c. submit the confirmation as referred to in letter b to the Mutual Fund Holder via postal service or electronic mail (e-mail); and
    d. ensure that funds from the redemption (redemption) of Mutual Fund Securities are delivered:

1. to the account registered under the name of the Mutual Fund Holder conducting the sale; or
2. to an account under the name of another Mutual Fund managed by the same Investment Manager, according to the order of the Mutual Fund Holder conducting the sale for the purchase of other Mutual Funds by and on behalf of the Mutual Fund Holder conducting the sale.

18. The Custodian Bank administering Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities must comply with the provisions in this Circular Letter of the Financial Services Authority and applicable legislation.

19. Every Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities transaction occurring using the user identity and password of the Mutual Fund Holder is the responsibility of the Mutual Fund Holder.

20. The Investment Manager must administer and store data related to Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities for a minimum of 5 (five) years.

21. The Investment Manager is responsible for losses suffered by Mutual Fund Holders caused by the failure of the Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities system owned by the Investment Manager or Mutual Fund Selling Agent, except where such electronic system failure is caused by force majeure conditions, such as natural disasters.

IV. TRANSITIONAL PROVISIONS

Investment Managers and/or Mutual Fund Selling Agents who have conducted Electronic Sale (subscription) and Redemption (redemption) of Mutual Fund Securities prior to the implementation of this Circular Letter of the Financial Services Authority must:
a. adjust to the provisions in this Circular Letter of the Financial Services Authority within a maximum of 6 (six) months from the date of issuance; and b. report the results of adjustment to the provisions in this Circular Letter of the Financial Services Authority to the Financial Services Authority no later than 15 (fifteen) days after the end of the adjustment period as referred to in letter a.

V. CLOSING

This Circular Letter of the Financial Services Authority takes effect on the date of issuance.

To ensure that everyone is aware of it, order the announcement of this Circular Letter of the Financial Services Authority by placing it in the State Gazette of the Republic of Indonesia.

Issued in Jakarta on 24 April 2014

EXECUTIVE HEAD
MARKET SUPERVISOR,
Signed,
NURHAIDA
Director of Legal Affairs I,
Legal Department
Signed,
Tini Kustini

Copy matches the original
Director of Legal Affairs I,
Legal Department

STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 47 DATED 13 JUNE 2014 Director of Legal Affairs I, Legal Department