BI Said The New Central Counterparty Institution Will Be Launched At The End Of September 2024

JAKARTA - Bank Indonesia (BI) will launch a new institution that manages the currency market and foreign exchange market in Indonesia or Central Counterparty (CCP) at the end of the third quarter of 2024.

For information, BI together with PT Bursa Efek Indonesia (IDX), PT Kliring Penjaminan Efek Indonesia (KPEI) and 8 banks namely Mandiri, BRI, BNI, BCA, CIMB Niaga, Danamon, Maybank, and Permata agreed on the development of CCP in the Money Market and Foreign Valuta Market (PUVA).

Bank Indonesia Governor Perry Warjiyo said the central counterpart (CCP) will be launched in the third quarter of 2024 or on September 30, 2024, accompanied by 8 banks that are participants and initial capital creators of CCP.

"We plan this September 30," Perry said in a working meeting with Commission XI of the DPR, Thursday, September 12.

According to Perry, there are at least four benefits of CCP attendance in Indonesia, namely increasing the volume of cash market transactions and foreign exchange markets, reducing credit risk, forming higher prices or interest rates, and reducing government debt costs.

"So CCP will really become a game changer for the development of the money market and foreign exchange market," he said.

Perry emphasized that the formation of the CCP is in line with the mandate of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (P2SK) which mandates BI to regulate, develop and oversee the foreign exchange market and market, including financial infrastructure (IPK).

And in line with the mandate of the G20 Financial Stability Board to its members.

"Because CCP is needed for risk mitigation in financial system stability, among others, it can arise from the risk of the money market, the foreign exchange market," he said.

Perry explained that CCP is a central party that is the opposite of transactions for all transaction actors or members. CCP acts as a seller for all buyers, and becomes a buyer for all sellers, thereby reducing the risk of credit from the opposing party.

In addition, Perry said that CCP would guarantee the completion of transactions of market players (members), implementing safe guarantee management to protect members and themselves.

"CCP conducts clearing and completion of transactions with net calculations for all market participants of CCP members (multilateral netting). This will increase efficiency by reducing the liquidity needs of its members so as to encourage increased transactions in the market. As well as supporting transparency in market activities," he explained.

The legal basis for the establishment of the CCP institution has been regulated through Bank Indonesia Regulation (PBI) Number 21/11/PBI/2019 concerning the Implementation of the Central Counterparty Transaction Derivative Interest Rate and Exchange Value Over the Counter.

In the regulation, the initial capital that must be paid up in the institution's formation is worth IDR 408.16 billion.

BI has deposited capital of IDR 40 billion or around 9.8 percent of the initial capital, there has also been an injection of capital from the Indonesia Stock Exchange (IDX) of IDR 208.16 billion or the equivalent of 51 percent, and a banking consortium of IDR 160 billion, with each portion per bank of IDR 20 billion.