BI Optimistic That CCP Launches Will Interest Foreign Money Marketers And Valuta

JAKARTA - Bank Indonesia (BI) will soon launch a new institution, namely the Central Counterparty (CCP) in the Money Market and Foreign Valuta Market (PUVA) on September 30, 2024.

The formation of CCP has been regulated in Bank Indonesia Regulation (PBI) Number 21/11/PBI/2019 concerning the Implementation of Central Counterparty Transactions for Derivative Interest Rates and Exchange Rates for Over the Counter.

In addition, the formation of CCP was carried out in a joint consortium including Bank Indonesia 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.

The CCP will become a Financial Market Infrastructure Agency (IPK) that carries out central clearing functions in money market transactions and foreign exchange markets (PUVA) by at the same time placing itself as a guarantor among the parties who make transactions.

Head of the BI Department of Financial Market Development (DPPK) Donny Hutabarat said CCP has an advantage that will make money market players and foreign exchange players become members and transact in the future.

According to Donny, one of CCP's advantages is efficiency in ensuring the company has sufficient capital for the risk (Margin Rule).

As well as calculating the capital costs required for investment (Capital Charge) when transacting.

"Margining rules and capital charges, the minimum capital calculation from the OJK is also adjusted. So for example, if it's in CCP, the capital charge will be immediately lower, so only two percent compared to if it's not on CCP, it's like now 50 percent," Donny said in Taklimat Media, Tuesday, September 24.

Therefore, Donny conveyed that CCP as an incentive regulator will provide a sense of security in order to mitigate the risk of transaction failure between parties (counterparty risk), liquidity risk (liquidity risk), and risk due to market price volatility (market risk).

"Well, it is considered in the calculation of the minimum capital fulfillment if the risk has been communicated. The minimum capital reserves are no longer needed, it is only subject to 2 percent, so if banks have DNDF positions, if they are closed at CCP, the minimum capital calculation will go down immediately, so that's only 2 percent," he said.

On the other hand, Donny said that his party as a CCP regulator had not planned to make money market and foreign exchange transactions mandatory.

"Well, was this mandatory? We haven't thought about it yet, even though it could be moderated, but we haven't all entered yet," he said.

According to Donny, the mandatory money market transactions and foreign exchange markets have not been determined because currently the products are transacted through the new CCP for Non-Deliverable Forward (DNDF) Domestic Transactions.

As for the Repurchase agreement (Repo), Interest Rate Swap (IRS), Overnight Index Swap (OIS), and others will continue to be developed from 2025 to 2030.