Bank Indonesia Uses KPEI Infrastructure To Run Central Counterparty Institutions

Bank Indonesia (Photo: Antara)

JAKARTA - Bank Indonesia (BI) will launch a new institution that manages the currency market and foreign exchange market in Indonesia or Central Counterparty (CCP) by collaborating with the Indonesian Stock Guarantee Clearing (KPEI).

For information, CCP acts as an institution that runs clearing and debt renewal (novation) for its member transactions.

Bank Indonesia Governor Perry Warjiyo explained that currently the process of establishing a central counterpart (CCP) is included in the bank's capital participation process and is included in the stage of drafting and finalizing the Inter-Shareholder Agreement (PAPS).

The agreement between PAPS shareholders for CCP development cooperation has been signed on August 12, 2024.

Perry said that his party had made adjustments to the articles of association with the Indonesian Stock Guarantee Clearing (KPEI), because the application of CCP requires infrastructure from KPEI.

"In the basic budget, it has been adjusted and there is also an extraordinary GMS that has been completed," he said in a Working Meeting with Commission XI of the DPR RI, Thursday, September 12.

Then in terms of operations, Perry said that the BI, KPEI and Bank systems were being interconnected in the final settlement of the transaction where this would be recorded at Bank Indonesia's Real Time Gross Settlement (RTGS).

"So then why are we also opening an account at Bank Indonesia for transactions, completing payment transactions. Now we are onboarding the BI-KPEI test with the bank. We are onboarding the test. God willing, it can be completed," he said.

Perry conveyed the purpose of interconnection to prepare CCP and bank reporting, so that it can support the development of CCP implementation in the market and monitoring of Bank Indonesia as a regulator. Meanwhile, in terms of organization and Human Resources (HR), the Money and Valas Market (PUV) unit is being formed in the organizational structure of CCP.

Perry said that he had asked the Senior Deputy Governor of Bank Indonesia (BI) Destry Damayanti and Deputy Governor of Bank Indonesia Doni Primanto Joewono that Bank Indonesia's human resources would not be included in much management, but as regulators.

In addition, Perry said that in terms of risk management, his party had also designed a default waters that were separate from the clearing agency.

"Where at CCP there are benefits to mitigate risks, from the first how the risk is included in the calculation fee, then also in the reserves, and there are several waterfalls, so that if there is a loss, of course it is not fast and does not enter for capital losses," he said.

Perry added that his party is also in the process of self-assessmenting the fulfillment of the Principles for Financial Market Infrastructures (PFMI) and updating the CCP rulebook.