JAKARTA - Bank Indonesia will soon launch a Central Counterparty (CCP) in the Foreign Exchange Money Market and Market (PUVA) to encourage a larger volume of transactions and liquidity.
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.
Meanwhile, 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.
Head of the BI Financial Market Development Department Donny Hutabarat explained that CCP is a Financial Market Infrastructure (IPK) that carries out central clearing functions in money market transactions and foreign exchange markets (PUVA).
"At the same time placing himself as a guarantor among the parties conducting transactions, 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)," he explained at Taklimat Media, Tuesday, September 24.
According to Donny, the impact of CCP formation is that foreign exchange market transactions are more efficient so that the volume of transactions and liquidity is greater, the determination of interest rates and exchange rates is more effective, and main market players are more active.
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The next impact is to support the effectiveness of monetary policy and stability of the Rupiah exchange rate, as well as to support the stability of the financial system.
"As well as CCP facilitates hedging instruments for banks and the business world, investors, the issuance of Government SBN, the business world, as well as financing the national economy," he said.
Donny explained that the development of CCP aims to encourage the deepening of the Money Market and Valas Market to support the transmission of monetary policy and maintain SSK through a decrease in market segmentation and increased market efficiency.
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