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PAYMENT, CLEARING AND SETTLEMENT

SYSTEMS IN INDONESIA

Indonesia

CONTENT
LIST OF ABBREVIATIONS ........................................................................................ 7
INTRODUCTION ........................................................................................................ 1
1. Institutional aspects .................................................................................................................. 1
1.1. Legal and Regulatory Framework ............................................................................................ 1
1.1.1. Payment and Settlement System.................................................................................................. 2
1.1.2. Securities Settlement System ........................................................................................................ 3
1.1.3. Other form of rules and regulations ............................................................................................ 4
1.2. Roles of Bank Indonesia ........................................................................................................... 4
1.2.1. Regulator and overseer of payment systems ............................................................................ 4
1.2.2. Provision of Settlement Account ................................................................................................. 5
1.2.3. Operator of Interbank Payment Systems and Securities Settlement System .................. 5
1.2.4. Facilitator of Development in Payment Systems .................................................................... 5
1.3. The role of other private and public sector bodies ................................................................ 6
1.3.1. BAPEPAM-LK ................................................................................................................................. 6
1.3.2. Providers for payment services .................................................................................................... 6
1.3.3. Providers for Clearing, Guarantee, Settlement, and Depository Services of Securities
Transactions .................................................................................................................................... 8
1.4. Recent developments ................................................................................................................. 8
1.4.1. The Indonesian act on funds transfer .......................................................................................... 8
1.4.2. Self Regulatory Organization (SRO) .......................................................................................... 8
2. Payment media ........................................................................................................................ 9
2.1. Cash .............................................................................................................................................. 9

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2.2. Non-cash ..................................................................................................................................... 9
2.2.1. Credit funds transfer ....................................................................................................................... 9
2.2.2. Cheque and bilyet giro ................................................................................................................... 9
2.2.3. Direct debit ...................................................................................................................................... 10
2.2.4. Card-based ....................................................................................................................................... 10
2.2.5. Electronic Money (e-money) ..................................................................................................... 11
2.2.6. Non cash terminals ........................................................................................................................ 11
2.3. Recent developments .............................................................................................................. 12
2.3.1. National standard of chip card specification for Indonesia ATM/debit cards ............. 12
2.3.2. Interoperability of e-money ........................................................................................................ 13
2.3.3. National Payment Gateway (NPG) .......................................................................................... 13
3. Payments and settlement systems.......................................................................................... 14
3.1. Overview ................................................................................................................................... 14
3.2. Large value Payment System .................................................................................................. 16
3.2.1. Institutional framework................................................................................................................ 16
3.2.2. Participation .................................................................................................................................... 17
3.2.3. Types of transactions .................................................................................................................... 18
3.2.4. Operating hours .............................................................................................................................. 18
3.2.5. Sources of liquidity ....................................................................................................................... 19
3.2.6. Management of credit risk of FLI ............................................................................................. 20
3.2.7. Settlement mechanism and management of risk .................................................................. 20
3.2.8. Technical aspect ............................................................................................................................. 21
3.2.9. Pricing policy .................................................................................................................................. 22

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3.3. Interbank Retail Payments Systems .......................................................................................22
3.3.1. SKNBI for interbank retail payments ....................................................................................... 22
3.3.2. Shared ATM networks/switching services ............................................................................. 25
3.3.3. EFT POS networks/switching services .................................................................................... 26
3.4. Bank Indonesia Government Electronic Banking (BIG-eB) ..............................................26
3.5. Major ongoing and future projects ......................................................................................... 27
3.5.1. Enhancements in Indonesia LVPS: 2nd Generation BI-RTGS System ......................... 27
4. Post-trade processing, clearing and securities settlement in Indonesia ................................. 30
4.1. General Overview .....................................................................................................................30
4.2. Post Trade Processing Systems ............................................................................................... 30
4.2.1. Trading and Confirmation ........................................................................................................... 30
4.2.2.Trade Repository ............................................................................................................................. 32
4.3. Central Counterparties and Clearing System........................................................................32
4.3.1. Clearing System ............................................................................................................................. 32
4.4. Securities settlement systems .................................................................................................33
4.4.1. Settlement system for the government securities and instruments of Bank Indonesia
open market operations ............................................................................................................. 33
4.4.2. Settlement system for securities issued by the private sector ............................................ 34
4.5. Recent development .................................................................................................................35
4.5.1. Enhancements in BI-SSSS: 2nd Generation BI-SSSS ........................................................ 35

Indonesia

Indonesia

LIST OF ABBREVIATIONS
ABS
ASPI

Automatic Bidding System


Asosiasi Sistem Pembayaran Indonesia (Indonesia Payment Systems
Association)

ASBANDA
ATM
BAPEPAM-LK

Asosiasi Bank Daerah (association of regional/provincial banks)


Automated Teller Machine
Badan Pengawas Pasar Modal dan Lembaga Keuangan (Indonesia Capital
Market and Non Bank Financial Institution Supervisory Agency)
Bursa Efek Indonesia (Indonesia Stock Exchange/IDX)
Bank Indonesia
Bidding System Central Computer
Bank Indonesia-Government Electronic Banking
Bank Indonesia-Real Time Gross Settlement
Bank for International Settlement
Bank Indonesia-Scripless Securities Settlement System
Central Depository and Book Entry Settlement System
Central Counterparty
Core Principles for Systemically Important Payment System
Central Securities Depository
Delivery Versus Payment
Electronic Funds Transfer at Point of Sale
First Available First Out
First In First Out
Fasilitas Likuiditas Intrahari (intraday collateralized liquidity facility)
Free of Payment
Financial Sector Assessment Programme
Failure to Settle
Himpunan Bank Pemerintah (association of state-owned banks)
Integrated Circuit
Kliring penjamin Efek Indonesia (Indonesia Clearing and Guarantee)
Kustodian Sentral Efek Indonesia (Indonesia Central Securities Depository)
Lembaga Penjamin Ekspor Indonesia (Indonesia Export Financing
Institution)
Large Value Payment System
Ministry of Finance
National Payment Gateway

BEI
BI
BidCC
BIG-eB
BI-RTGS
BIS
BI-SSSS
C-BEST
CCP
CP SIPS
CSD
DVP
EFT POS
FAFO
FIFO
FLI
FOP
FSAP
FTS
HIMBARA
IC
KPEI
KSEI
LPEI
LVPS
MoF
NPG

Indonesia
NSICCS
OMO
OTC
PBI
PERBANAS
PIN
PVP
SBI
SBN
SBSN
SCC
SEBI
SRO
SSS
SSTS
ST
STP
SUN
SWIPS
TSA
VPN

National Standard of Chip Card Specification


Open Market Operation
Over the Counter
Peraturan Bank Indonesia (Bank Indonesia Regulation)
Persatuan Bank Swasta Nasional (association of private national banks)
Personal Identification Number
Payment Versus Payment
Sertifikat Bank Indonesia (Bank Indonesia certificate/the central bank bills)
Surat Berharga Negara (the government securities)
Surat Berharga Syariah Negara (the government sharia securities)
BI-SSSS Central Computer
Surat Edaran Bank Indonesia (Bank Indonesia Circular Letter)
Self Regulatory Organization
Securities Settlement System
Scripless Securities Transfer System
BI-SSSS Terminal
Straight Through Processing
Surat Utang Negara (the government conventional securities)
System Wide Important Payment System
Treasury Single Account
Virtual Private Network

Indonesia
INTRODUCTION
Indonesia Rupiah (IDR) payment services in Indonesia are provided by the central bank,
commercial banks and non-bank institutions. With respect to payment systems, the central bank
provides Bank Indonesia Real Time Gross Settlement (BI-RTGS) system and Bank Indonesia
National Clearing System (Sistem Kliring Nasional Bank Indonesia (SKNBI), in Bahasa). For
transferring and settling transactions of domestic securities, there are 2 (two) securities settlement
systems in the country handling such services; one is operated by Bank Indonesia and the other is
operated by Indonesia Central Securities Depository Corporation (i.e. PT. Kustodian Sentral Efek
Indonesia (PT. KSEI)).
BI-RTGS system was put into operation in 2000 to make settlements of the large value interbank
credit funds transfers1, monetary operations conducted by Bank Indonesia, and net figures from
the retail interbank payment systems in the country. Participants of BI-RTGS system are mostly
the commercial banks and a few selected non-bank institutions. Further developments in BI-RTGS
system, known as the 2nd generation BI-RTGS system, will incorporate offsetting features of
bilateral and multilateral netting with the purpose of economizing on the use of liquidity for
settlement.
SKNBI launched in 2005 is a deferred multilateral net settlement system for retail interbank credit
funds transfers and payments by check and other debit instruments. Since the end of 2010 SKNBI
has been linking 109 local clearing houses throughout the country, 39 of which are operated by
Bank Indonesia head and regional offices and the remaining by branches of appointed commercial
banks.
Commercial banks are the basis in providing payment services to the public. Commercial banks
provide payment services through their own intra-bank on-line funds transfer network and
interbank payment switching services2 in the country.
Non-bank institutions which provide payment services can generally be divided into institutions
authorized to conduct payment services by law, or licensed by Bank Indonesia. They provide the
alternative services for people not yet covered by banking services. In the end of 2006, Bank
Indonesia issued the regulation on money remittance services covering remittance services
conducted by non-bank institutions so as to assure the implementation of consumer protection
principles and to fulfill recommendation from international agencies with regard to the anti money
laundering concern.
1. Institutional aspects
1.1.

Legal and Regulatory Framework

i.e. settlement of payment obligations from financial markets in the country and time-critical
interbank credit funds transfers.
2
Switching services are companies that provide the routing and clearing of data among banks in
the interconnected ATM network.
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Bank Indonesia has legal power to play the role as regulator, operator, and overseer of
payment systems in Indonesia.
1.1.1. Payment and Settlement System
1.1.1.1

Bank Indonesia Act

Bank Indonesia Act (BI Act), the Act number 23 of 1999 on Bank Indonesia as lastly amended by
the Act number 6 of 2009 (hereinafter referred to as BI Act), is the main source of stipulations
regarding payment systems in Indonesia.
Under BI Act, Bank Indonesia has solitary objective to achieve and maintain the stability of IDR.
In regulating and safeguarding the smoothness of payment systems, Bank Indonesia is
authorized to operate, grant approval and license to operate payment systems services;
require operators of payment systems services to submit reports on their activities; and
determine the use of payment instrument.
With those authorities, Bank Indonesia plays strategic roles as operator, regulator, facilitator and
overseer of payment systems.3
BI Act also provides the basis for Bank Indonesia to:
regulate and operate clearing system for interbank payments;
approve the operation of clearing systems for interbank funds transfers that is conducted by
parties other than Bank Indonesia;
conduct settlement services for interbank payments; and/or
approve the operation of settlement services for interbank payments that is conducted by
parties other than Bank Indonesia.
1.1.1.2

Other related Acts

Act 7 of 1992 on Banking, as amended by Act 10 of 1998 (hereinafter referred to as Banking Act),
sets out general stipulations on banking activities. Under Banking Act, there are 2 (two) types of
banks, commercial banks and rural banks. Article 6.e of Banking Act stipulates that commercial
banks can conduct fund transfers, whether on its own behalf or on their customers. For rural
banks, there are some limitations regarding their participation in payment systems.

BI Act provides authority for BI to regulate, operate and oversee payment systems in Indonesia.

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Act 8 of 2010 on the Prevention and Eradication of the Crime of Money Laundering aims at
minimizing the relevant financial crime involving great amounts of assets (currently the
requirement is above 100 million by reducing the possibility of money laundering activities, with
the final goals to safeguard national economic stability and state security. Under this act, operators
of card-based payment instruments, e-money and money remittance are defined as provider of
financial services and must meet the requirements regarding anti-money laundering.
Act 37 of 2004 on Bankruptcy and Suspension of Obligation for Payment of Debts provides the
legal basis for the exclusion of zero hour rules for payment transactions. This Act states the
finality of settlement in the case of bankruptcy or liquidation in Article 24 paragraph (3) by
regulating that funds transfer made before the pronouncement of bankruptcy shall be completed.
Article 10 of Act 24 of 2004 on Deposit Insurance Agency and its elucidation states that customers
funds which are going to be transferred out of the bank, but are still under such banks
bookkeeping, shall be deemed as customers deposits. And likewise, incoming transfers for
customers received by the bank but not yet credited to respective customers accounts, shall also
be deemed as customers deposits.
Act 21 of 2008 on Sharia Banking stipulates sharia banking activities. Similar to Banking Act, the
Sharia Banking Act divides sharia banks into 2 (two) types, namely sharia commercial banks and
sharia rural banks. Conducting sharia-based transfers, whether on its own behalf or their
customers, is viewed as one of the business activities of sharia commercial banks in the Sharia
Banking Act. As for sharia rural banks, similar limitations are also put in place as the ones applied
to rural banks under Banking Act.
Act 11 of 2008 on Electronic Transaction and Information serves as the legal basis for the validity
of electronic signature and for the acceptance of electronic information/documents as a lawful
means of evidence. This Act facilitates the industry to take advantage of the latest technology in
developing new payment mechanism.
1.1.2. Securities Settlement System
1.1.2.1

Capital market act

Act 8 of 1995 on Capital Market (Capital Market Act) is the main legislation that regulates
operations of securities exchange, clearing and guarantee for settlement of exchange traded
securities, as well as central securities depository. Under Capital Market Act, the clearing,
guarantee, settlement, depository services are conducted by Indonesia Clearing and Guarantee
Corporation (PT Kliring Penjaminan Efek Indonesia (PT. KPEI)) and PT. KSEI. These institutions
obtain licenses from Indonesia Capital Market and Non Bank Financial Institution Supervisory
Agency (Badan Pengawas Pasar Modal dan Lembaga Keuangan (BAPEPAM-LK)) before
conducting their services. By the end of 2010, BAPEPAM-LK had only licensed PT. KSEI as
Indonesia central securities depository (CSD), and PT. KPEI as the central counterparty (CCP).
1.1.2.2

Government securities acts


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Act 24 of 2002 on Government Securities stipulates the issuance of government securities and
gives mandate to Bank Indonesia as the auction agent and registrar of the government securities.
Similarly, Act 19 of 2008 on Government Sharia Securities provides stipulations regarding the
issuance of the government sharia securities and gives mandate to Bank Indonesia as the auction
agent and registrar of the government sharia securities.
BI Act stipulates that in the event that the government intends to issue the government securities,
the government shall hold prior consultations with Bank Indonesia. BI Act also authorizes Bank
Indonesia to implement monetary policies and operations, including issuance of Bank Indonesia
Certificate as a monetary instrument.
These 3 (three) pieces of legislations provide the legal framework for Bank Indonesia to regulate
and operate Bank Indonesia Scripless Securities Settlement System (BI-SSSS).
1.1.3. Other form of rules and regulations
To complement regulations issued by Bank Indonesia and other relevant authorities, the interbank
payments activities in Indonesia are also regulated by rules formulated by the relevant industries or
participants themselves. These rules are generally issued in the form of bye-laws or other similar
club rules, and basically cover more detailed and specific aspects of particular payment activities.
These are usually the area which are not covered by authorities regulations and mostly related
with common procedures of certain parts of day-to-day activities. \
1.2.

Roles of Bank Indonesia

As payments and settlement systems support functioning monetary and financial systems as well
as economic activities and development, Bank Indonesia has taken a leading function in
developing Indonesia payments and settlement systems to reach the higher stage of both safety and
efficiency. Under BI Act, Bank Indonesia has solitary objective to achieve and maintain the
stability of Rupiah (IDR). One of 3 (three) tasks that Bank Indonesia assumes to meet such an
objective is to regulate and safeguard smoothness of payment systems in the country. In doing
such a task, Bank Indonesia plays the roles as the regulator, overseer, facilitator, and operator.
1.2.1. Regulator and overseer of payment systems
As the regulator, Bank Indonesia issues the regulations with the purpose of achieving higher stage
of safety and efficieny in the payment systems as well as promoting the consumer protection in the
payment industry. Bank Indonesia plays the role as the overseer in order to control risks in the
payment systems and to promote efficiency in the payment systems.
According to BI Act, Bank Indonesia has the power to issue regulations, including the Bank
Indonesia Regulation (Peraturan Bank Indonesia/PBI) and Bank Indonesia Circular Letter (Surat
Edaran Bank Indonesia/SEBI). These regulations, covering the system of making transfers (i.e BIRTGS and SKNBI), payment instruments (i.e. Card-based Payment Instruments and Electronic

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Money) and other transfer mechanism (i.e. Money Remittance), are incorporated in the State
Gazette.
1.2.2. Provision of Settlement Account
As stipulated in PBI, Bank Indonesia provides settlement account services for the commercial
banks, government, international monetary/financial institutions and other institutions. The
settlement account is basic current account. The settlement accounts must be in funds at all times
with no credit provided by BI. Institutions shall provide securities in the form of Sertifikat Bank
Indonesia (SBI) and the government securities as the collateral in order to obtain liquidity facilities
from Bank Indonesia. The goal of Bank Indonesia settlement account policy is to promote the
national payment system to a higher level of efficiency, safety, integrity, and robustness in the face
of financial crises. When opening the settlement account for an applicant, Bank Indonesia
considers, among other things: whether the applicant fits the definition of commercial bank in
related banking Acts, whether provision of settlement account to the applicant might jeopardize
the soundness and efficiency of the financial system, whether there is a legitimate business interest
that can be served by the settlement account, and whether provision of settlement account would
adversely affect the reputation of Bank Indonesia.
1.2.3. Operator of Interbank Payment Systems and Securities Settlement System
Currently, Bank Indonesia is the main operator of clearing and settlement systems for interbank
payments in Indonesia. Bank Indonesia operates 2 (two) national core interbank payment systems,
i.e. BI-RTGS system as Indonesia systemically important payment system (SIPS) and processing
large-value interbank payments in the country, and SKNBI for retail interbank payments. SKNBI
settles the interbank payments on a deferred multilateral net basis. Since the implementation of
SKNBI, all retail interbank credit funds transfers settled through it are processed paperless
allowing Bank Indonesia to end the use of the paper-based credit note as the payment instrument
for retail interbank credit funds transfers.
Bank Indonesia operates as well BI-SSSS for settlement and depository of securities issued by the
government and for settlement of instruments of OMO by Bank Indonesia.
1.2.4. Facilitator of Development in Payment Systems
As the facilitator, Bank Indonesia guides the development of the national payment systems and
supports the developments of payment systems operated by other players.
Bank Indonesia plays its role as the facilitator or catalyst mainly in the development of the retail
and micro payments systems conducted by players of the retail and micro payments industry, such
as the standardization of payment cards (e.g. ATM/debit cards) and e-money issued by the
industry players and the development of a National Payment Gateway (NPG) for the retail and micro
payments. Bank Indonesia could promote and coordinate with the relevant stakeholders to
implement the relevant initiatives. The general objective is to address specific problems regarding
retail/micro payment system, the solutions of which may be compromised but acceptable for the
relevant individual stakeholders, including Bank Indonesia itself. These solutions could also help
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encourage follow-up innovations and institutional reforms within the retail and micro payments
industry.
1.3.

The role of other private and public sector bodies

There are several public sector authorities that relates closely with the provision of payment and
settlement system services, namely BAPEPAM- LK, commercial banks and rural banks, non bank
institutions and also other government authorities such as Ministry of Communication and
Information and Ministry of Trade.
1.3.1. BAPEPAM-LK
BAPEPAM-LK is responsible for regulating and supervising Indonesian capital market, including
the securities transactions in the primary and secondary markets as well as operation of the
securities clearing, settlement and custodian services.
1.3.2. Providers for payment services
Institutions that provide payment services in Indonesia can be grouped into banks and non-bank
institutions.
1.3.2.1.

Banks

The Indonesian banking system consists of Bank Indonesia, commercial banks and rural banks.
However, only the first two types of institutions are allowed to provide payment services in a
broad sense, whilst functions for providing payment services of rural banks are limited.
The commercial banks are the largest group of financial institutions providing the payment
services. For the interbank payments, they can be processed through either BI-RTGS System,
SKNBI or the domestic interbank payment switching services 4, and the settlement takes place
through either their settlement account (giro account) held at BI-RTGS system or their settlement
account held at the designated commercial banks. There are now 143 commercial banks (including
the sharia banks and sharia units of the conventional banks) with 14,847 offices.
Meanwhile, rural banks, even though they are part of the Indonesian banking system, according to
the regulation they cannot participate in interbank clearing and settlement. They are also limited to
take deposit (i.e. only in the form of saving and time deposit accounts) and provide loan (i.e. only
in a limited area such as in a sub-district/sub-municipality), as well as not permitted to provide
interbank payments since they are not allowed to provide their customers with giro accounts so
they cannot issue checks and bilyet giros5. Nevertheless, there are rural banks operating in suburb
areas of big cities as well as in small cities and sub-districts/sub-municipalities that have provided
4

They are ATM Bersama, ATM Link, ATM Prima, and Alto.
Bilyet giro is a non-negotiable debit instrument, which is very similar in nature to cheque. The main
differences are that bilyet giro can not be cashed by its holder and it can be post dated.
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their customers, especially merchants, with Point Of Sale (POS) devices to provide payment points
for merchants customers. Services provided by these payment points are limited to only bill
payments, and merchants cannot accept cash deposits or provide cash withdrawals. There are also
2 big rural banks operating ATM located in their offices with the purpose of providing their
customers with 247 cash withdrawals as well as intra-bank funds transfers and billing payments.
Moreover some rural banks acting as the recipients provide international money remittance
services for Indonesian migrant workers. Until 2010, there are 1,706 rural banks in Indonesia.
1.3.2.2. Non-bank institutions
The involvement of non-bank institutions in Indonesia payments system has been growing
consistently. Their involvements are in the forms of providing payment instruments (such as
issuing credit card, e-money and money transfers), remittance services, and switching services for
inter-bank payments and funds transfers.
With regard to the card-based payment instruments, there is 1 (one) non-bank financial institution
issuing credit card, and the non-bank institutions taking part in the card-based (credit card and
debit/ATM card) payment industry conduct their businesses as the principals 6 , acquirers 7 , and
operators8 of switching, clearing and settlement services.
As for e-money, being the newer type of payment instruments in Indonesia, it is recorded that
there are 9 (nine) institutions issuing e-money at the end of 2010. 4 (four)9 of them are non-bank
institutions, with 3 (three) of them telecommunication companies. Particularly for these
telecommunication companies, it is believed that they will be the frontrunners in providing
payment services via mobile phones for population uncovered by banking services, as the number
of mobile phones users in the country is far greater than the number of bank accounts holders.
In relation to money remittance services, besides commercial banks, there are more than 60 nonbank money remitters providing domestic remittance services, which include Indonesia postal
company (PT. Pos Indonesia) and Indonesia state-owned pawn-shop company (PT. Perum
Pegadaian). Money remittance is of great importance for Bank Indonesia as Indonesia has a great
number of migrant workers, who regularly remit money to their families in their hometown. The
number of these remittances has been growing steadily and it starts to play a worth-to-noted
contribution to the national economy. Justifiably, Bank Indonesia also holds great interest to
assure that consumer protection principles are being applied in the money remittance services.
Those were the rationales Bank Indonesia had issued the regulation on money remittance in 2006,
which in turn triggered the increase in the number of money remitters being licensed or registered
in Bank Indonesia.
6

American Express, Japan Credit Bureue (JCB) Nusantara, Mastercard Internasional Indonesia, Visa
Internasional (Asia-Pacific) Ltd, China Union Pay, PT. Artajasa Pembayaran Elektronis (ATM Bersama),
PT. Rintis Sejahtera (ATM Prima/ATM BCA), PT. Alto Network (ALTO)
7
PT. Finnet Indonesia
8
Japan Credit Bureau (JCB) Nusantara, Mastercard Internasional Indonesia, Visa Internasional (AsiaPacific) Ltd, PT. Artajasa Pembayaran Elektronis (ATM Bersama), PT. Rintis Sejahtera (ATM Prima/ATM
BCA), PT. Alto Network (ALTO)
9
PT. Telekomunikasi Indonesia, PT. Telekomunikasi Selular, PT. Indosat, PT. Skye Sab Indonesia

Indonesia
1.3.3. Providers for Clearing, Guarantee, Settlement, and Depository Services of
Securities Transactions
1.3.3.1.

Central securities depository (CSD)

There are 2 (two) CSDs in Indonesia, i.e. PT. KSEI operating its depository and settlement system
called C-BEST and Bank Indonesia operating its depository and settlement system called BI-SSSS.
PT. KSEI is established for the purpose of performing CSD functions by providing custodian
services as well as orderly, fair and efficient settlement services of securities transactions. PT.
KSEI makes rules on the central custodian services and settlement services, as well as the fees of
its services. The rules of PT. KSEI amendments thereof, will only become effective when
approved by BAPEPAM-LK.
1.4.

Recent developments

1.4.1. The Indonesian act on funds transfer


The Act covers wide aspects of payment systems, among others: the basic principles of funds
transfer activities, commencement of funds transfer activities, licensing requirement for non-bank
institutions, oversight, and sanctions. The enactment of this Act will make the operation of
payment systems services in Indonesia more secure and efficient.
1.4.2. Self Regulatory Organization (SRO)
Payment System in Indonesia has undergone significant changes for current decade. The
significant changes include the move toward the increasing reliance on the use of newly developed
technologies to enable e-payment. This condition requires the central bank to be able to responsive
to the development of technology.
The establishment of Indonesian Payment systems SRO in 2011 is one of Bank Indonesias policy
to increase the role of industry in developing a payment system in accordance with market demand.
This SRO, which regulated the technical and micro policy for payment and settlement industry,
will be strategic partner of BI in managing and improving efficient, smooth and reliance payment
systems. This institution will become an independent and professional institution which represents
the various players in payment industry and has the ability to accommodate various changes and
progresses that occurred in this industry. Thus, BI can be more focused on macro regulation and
policy and SRO will have the authority to regulate themselves in term of technical aspects such as
standardization, code of conduct etc.

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2. Payment media
2.1.

Cash

The Indonesia currency is Rupiah. Under Bank Indonesia Act, any activities involving money or
having a purpose of payment or any obligation which has to be fulfilled by money, if it is
conducted in the territory of the Republic of Indonesia, shall be settled in Rupiah currency, except
otherwise prescribed by Bank Indonesia regulation.
Bank Indonesia has the sole right to issue bank notes and coins. Bank notes in circulation are in
denominations of IDR 1,000; 2,000; 5,000; 10,000; 20,000; 50,000; and 100,000, while coins
issued in circulation are in denominations of IDR 1; 50; 100; 200; 500; and 1,000. Bank notes and
coins in circulation reached IDR 318 trillion in the end of 2010, increasing 44.3% compared to
bank notes and coins in circulation in 2007.
2.2.

Non-cash

Non-cash payments in Indonesia are mostly provided by the banking system. Commercial banks
offer a variety of accounts (e.g. saving, checking and time deposit accounts) to their customers,
while rural banks may only offer saving and time deposit accounts. Most commercial banks
provide their customers with ATM services allowing their customers to access directly their saving
accounts at anytime along with the provision of cheque and bilyet giro for checking accounts.
Payments using cards (credit and debit/ATM cards) as well as e-money have been gaining larger
popularity.
2.2.1. Credit funds transfer
Banks provide credit funds transfer services in their offices and via their delivery channels (ATM,
internet and mobile banking). For inter-bank funds transfers ordered by banks customers, they can
be processed via shared ATM networks/payments switching services, SKNBI and BI-RTGS
system. There is a threshold for inter-bank credit funds transfers processed through SKNBI, i.e. up
to maximum of IDR100 millions that can be processed via SKNBI. Any amounts of interbank
credit funds transfers can be processed through BI-RTGS system. There is a limit of total IDR25
millions per day per account of banks customers for inter-bank credit funds transfers processed
via the shared ATM networks.
2.2.2. Cheque and bilyet giro
It is a common banking practice for commercial banks to provide their customers with cheque and
bilyet giro facilities. Although use of those debit payment instruments tends to decrease recently
due to rapidly growing use of others means of payments, there are customers of banks keeping on
to use them. Cheque and bilyet giro are usually used for payments of regular purchases of goods
and services among businesses and for bill payments.
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To maintain confidence of the society in using cheque and bilyet giro, Bank Indonesia issued a
strict rule with regard to dishonored 10 use of cheques and bilyet giro. If three small amount
cheques and bilyet giros are dishonored within six months, or one cheque or bilyet giro above
amount of IDR 500 millions is dishonored, the customer is blacklisted and prohibited from
holding cheque at any banks for a period of one year.
2.2.3. Direct debit
Usage of direct debit is still limited as intra-bank payments. With the lack of an interbank giro
(direct debit) system, utility companies do not yet have alternative for collection of their bill
payments. The available alternative is to make direct debit arrangements with many commercial
banks for collection of their bill payments.
2.2.4. Debit Note
Debit Note is a document submitted by a bank or BI for the purpose of collection from another
bank with maximum amount IDR 10 millions.
2.2.5. Card-based
Card-based payments, with both credit and debit/ATM cards, have been increasingly used in the
local market.
2.2.4.1.

Credit card

Major international credit card brands such as VISA, Mastercard, Amex and JCB are widely
accepted for payments goods and services purchases in the country. There is 1 (one) domestic
commercial bank, i.e. Bank Central Asia (BCA), issuing a proprietary credit card called BCA card.
Credit card issuance by commercial banks and non-bank financial institutions must be certified by
respective brand-owners (the principals) and licensed by Bank Indonesia.
Use of credit cards have grown very fast: during 3 years, credit card has grown 51.79 % whereas
in 2007 attaining 129.29 million transactions, in 2010 achieving 180.55 million transactions. On
the other hand total value in the last 3 year also upsurges to 119.44 % from IDR 72.60 billions in
2007 up to IDR 147.22 billions in 2010. There are about 13.22 million cards in circulation in
201011.
2.2.4.2.

Debit/ATM (cash) card

In the last 5 years, debit/ATM card payments have been growing significantly from 1,103.23
million transactions in 2007 to 1,641.40 million transactions in 2010, increasing 48.8%.
10

i.e. payments using check or bilyet giro that do not cover with sufficient balance of funds in account of
banks customers paying with those debit payment instruments
11
Data until November 2010

10

Indonesia
Nevertheless, compared to Indonesian population, use of debit/ATM cards is still insignificant,
averaging at 6 transactions per person per year in 2010. There are 3 (three) domestic shared ATM
networks (ATM Bersama, ATM Prima/ATM BCA and Alto) and two international shared ATM
networks (Cirrus of Mastercard and Plus of Visa International) existing at the moment. The
domestic shared ATM networks are not yet linked to each other forcing some banks to become
members of more than one networks. ATM cards are used not only for withdrawals and account
balance inquiries, but also for intra and interbank funds transfers as well as utilities payments such
as payments for telephones/mobile phones bills, credit card bills, electricity bills, tax bills, etc.
Debit card payments at point of sale (EFT POS) have been becoming more popular, mostly in big
cities. Some domestic banks have issued debit cards with the brands of Maestro of Mastercard and
Visa Electron of Visa International. The other banks issue proprietary debit cards with a current
large number of POS devices at merchants sites. The lack of business agreements among the
various parties seems a major obstacle to achieve a one POS terminal per merchant vision. There
are currently 46 commercial banks offering debit cards to their customers. In 2010, there are about
51.8 million cards in circulation.
2.2.6. Electronic Money (e-money)
E-money in Indonesia is categorized into two types. One is the chip-based in which the value of
money is stored in an integrated circuit (IC) chip embedded in devices such as plastic cards, and
the other is the server-based in which the value is stored centrally in servers of the providers of emoney services.
There are currently 9 (nine) e-money issuers, i.e. 5 (five) commercial banks and 4 (four) non-bank
institutions. Such a newer payment instrument offers the society a cashless payment, especially
micro payments, such as for transportation, gasoline purchases, purchasing goods at convenient
stores and vending machines, as well as payments for toll and parking charges. Under a Bank
Indonesia regulation, the maximum value that can be stored in e-money is IDR 1 million for
unregistered e-money and IDR 5 millions for registered e-money. Moreover, the total value of
payments in one calendar month shall not exceed IDR 20 millions.
2.2.7. Non cash terminals
2.2.6.1.

Automated teller machine (ATM)

ATM is one of delivery channels allowing banks customers to perform routine banking
transactions without having to visit banks offices. Initially, ATM was used only for cash
withdrawal and balance inquiry. Since operation of ATM switching services, ATM provides as
well inter-bank funds transfers and bill payments services. As per December 2010, there were
approximately 30 thousand ATMs in Indonesia which has the significant increase of 37% from
2007.
2.2.6.2.

Electronic funds transfer at point of sale (EFT POS)

11

Indonesia
Payments via EFT POS have been growing steadily in line with the increased acceptance of
merchants for such an electronic payment. EFT POS is the delivery channel allowing ATM/debit
card holders to pay merchants for their purchase of goods and services through online funds
transfers from cardholders account to merchants account.
2.2.6.3.

Phone banking

Phone banking offers services such as orders for funds transfers, account balance enquiries and
billing payments over telephones. With regard to security purpose of using such a delivery channel,
operators of banks providing phone banking services will ask their customers for unique
information of the customers as a means of the authentication.
2.2.6.4.

Mobile/SMS banking

Due to rapid growth in mobile phones industry, banks customers in these days are able to manage
their payment activities through their mobile phones. The features are similar tothose in phone
banking such as account balance inquiries, billing payments and orders for funds transfers over
mobile phones. For the security purpose, banks customers are required to register their mobile
phone number to the banks prior to the provision of electronic payments via such a delivery
channel. Moreover, banks customers use unique information of personal identification number
(PIN) for the authentication.
2.2.6.5.

Internet banking

Similar to phone and mobile banking, the use of internet banking have been boosting electronic
payment activities as well. Through internet banking, banks customers are able to conduct
account balance enquiries, orders for funds transfers and billing payments and to some extent the
internet banking services provide the customers with services for deposit placements, applications
for banks loans, etc.
A number of banks have also launched internet payment services that enable their customers to
pay for their internet-through purchases of goods and services.
2.3.

Recent developments

2.3.1. National standard of chip card specification for Indonesia ATM/debit cards
With regard to more secure used of ATM/debit cards for electronic payments, Bank Indonesia and
the ATM/debit card payments industry had agreed to implement use of chip in ATM/debit cards
issued in Indonesia, and in the early of 2009 issued the national standard of chip card specification
(NSICCS) for ATM/debit cards. Use of the standard chip will support technical interoperability
among ATM/debit cards in the country, and, thus, facilitate implementation of interlinking the
infrastructures (i.e. ATM and POS networks) of the issuers of ATM/debit cards and the providers
of shared ATM/POS networks.
12

Indonesia
2.3.2. Interoperability of e-money
In order to increase efficiency in operations of e-money services, since 2009 Bank Indonesia has
been facilitating the initiative to promote interoperability of e-money services provided by various
providers. The industry will set up the interoperability schemes for both the chip-based and serverbased e-money.
2.3.3. National Payment Gateway (NPG)
Currently Bank Indonesia and the payments system industry have been working together to set out
a NPG for Indonesia. Basically, NPG is needed to improve efficiency of the payments system
industry as a whole. However, the immediate milestone chosen to be set is the existence of NPG
for retail and micro payments.
Focus on retail and micro payments is derived from the existing condition of various front end
delivery channels (e.g ATMs and POS devices) offered by the industry players and no
convergence in using a common (shared) infrastructure for switching retail and micro payments
(e.g. card-based, internet and mobile payments). Through NPG, reduction in duplicative
investments on the delivery channels (i.e. ATMs and POS devices) and efficient operation of
switching services for retail and micro payments in the country can be achieved. Moreover, it will
provide the high efficient, convenient, swift and safe retail payments system for consumers of all
banks and non-banks providing retail and micro payments services all over the country.
NPG will require interoperability of delivery channels and instruments of retail and micro
payments in the country, common and scalable standards for payments messaging exchange,
protocol as well as system/network security and reliability, and financial and operational risk
management tools.

13

Indonesia
3. Payments and settlement systems
3.1.

Overview

There are 2 (two) payments and settlement systems in the country: interbank large-value payments
system and retail and micro payments system. In the retail and micro payments system, most retail
and micro payments services are provided by commercial banks through some payment
instruments: cheque and bilyet giro, electronic payment instruments and banker acceptance (bank
draft).
Interbank payments with cheques and bilyet giros are processed through SKNBI. SKNBI is a
deferred multilateral net settlement system, in which settlement of net figures from SKNBI is
conducted at the designated time in the same day through BI-RTGS system. For card-based
payment instruments (credit and debit/ATM cards), settlement for the interbank level is also
conducted on multilateral net basis using the central bank money (through BI-RTGS system) or
commercial bank money (through the accounts at commercial banks appointed as the settlement
banks).
For large-value and time-critical interbank payments, settlement of those payments in BI-RTGS
system is performed on a gross basis. Until nowadays, BI-RTGS transactions account for around
90% of total value of the interbank payments in the country.

Table 1: Interbank payments system in Indonesia


Payment systems
Types of payment
Method of
Name
settlement
Interbank large-value credit BI-RTGS
Gross
funds transfer
Interbank retail credit funds SKNBI
Net
transfer
Interbank paper-based debit SKNBI
Net
payments
with
the
instruments of cheques,
bilyet giro and other debit
notes
ATM
Net
Shared
ATM
network Bersama
(domestic)
PRIMA
Net
/ATM BCA
14

Settlement
Central
Commercial
bank money bank money
V
V

Indonesia

Types of payment

Shared ATM network


(international)
Shared debit-card network
(domestic)
Shared debit-card network
(international)
Propriatery debit-card
network (domestic)
Credit card
Propriatery credit-card
network (domestic)
Electronic Money

Payment systems
Method of
Name
settlement
ALTO
Net
ATM Link
Net
Cirrus
Net

Settlement
Central
Commercial
bank money bank money
V
V
V

Plus
Debit
PRIMA
Maestro
VISA
Electron
Debit BCA

Overbooking

Visa
Mastercard
JCB
BCA
BCA

Net
Net
Net
Net
-

V
V
V
V
V

Net or Gross

internal
system of
the issuers
Remittance (domestic)
internal
system of
the
operators
(i.e. postal
co., telco.
cos and
others)
Remittance (international)
internal
system of
the
operators
(i.e.
Western
Union and
MoneyGra
m)
Funds legs of securities PT. KSEI
transactions on IDX or OTC and its
settlement
banks

15

Net
Net

V
V

Net
Net

V
V
V

Indonesia
LARGE VALUE PAYMENT SYSTEM

The implementation of BI-RTGS system since year 2000 started as a response to the growing
awareness of the need for sound risk management in settlement of large-value funds transfers in
Indonesia. BI-RTGS system operated by Bank Indonesia offers a powerful mechanism for limiting
settlement and systemic risks in settlement process of Indonesian Rupiah (IDR) interbank largevalue funds transfers through its settlement mechanism taking place on a gross basis and in real
time. .
With regard to Bank Indonesias functions in the monetary policy implementation, BI-RTGS
system has enabled Bank Indonesia to monitor, in real time, the liquidity condition of all
commercial banks in the country. Accordingly, it makes Bank Indonesia open-market operations
in the domestic inter-bank money market much more effective.
BI-RTGS system can provide:
delivery-versus-payment (DVP) settlement mechanism which has been implemented since
2004 via its DVP link to BI-SSSS; and
payment-versus-payment (PVP) settlement mechanism which has been in operation since
early 2010 via its PVP link to USD RTGS system in Hong Kong (that is, USD CHATS),
which could in turn contribute to the reduction of settlement risk in settlement of both transactions
of securities held with BI-SSSS and domestic interbank USD/IDR FX trades which is the largest
domestic FX market.
According to the results of the financial sector assessment programme (FSAP) on BI-RTGS
system conducted in October 2009 by the assessors from the International Monetary Funds (IMF)
and World Bank (WB), there are 6 (six) core principles12 which are already observed, and 3 (three)
core principles13 which are broadly observed.
The average daily value of BI-RTGS transactions in 2010 is around IDR 218 trillions
(approximately USD 23.9 billion), with daily volume averaging at 56 thousand transactions.
3.2.1. Institutional framework
BI-RTGS system is fully operated, governed and overseen by Bank Indonesia. BI-RTGS System is
an electronic fund transfer system for IDR in which the settlements are performed in a real-time
per individual transaction basis. The BI-RTGS system consists of three main components, which
are the RTGS Central Computer (RCC) in Bank Indonesia, RTGS Terminal (RT) in participants,
and communication network. RT consists of central department and subsidiary department. The
operating rules of BI-RTGS System cover areas such as general duties and responsibilities of the
participants, minimum requirements, and backup requirements.
As the regulator of payments and settlement systems in Indonesia, Bank Indonesia has set a wellfounded legal basis for implementation of BI-RTGS, which is in accordance with core principles
12
13

CP II, CP III, CP IV, CP VI, CP VII, and CP VIII


CP I, CP IX and CP X

16

Indonesia
for systemically important payment system (CP SIPS) of Bank for International Settlements (BIS)
and in the forms of PBI and SEBI. The regulation prescribes general provisions with regard to the
legal basis, the rules and procedures, management of risks in the operation of BI-RTG system, the
finality of settlement, the security and reliability of BI-RTGS system, efficiency in the operation of
BI-RTGS, the participation, good governance in the operation of BI-RTGS, the oversight of BIRTGS system, and the sanctions. The technical rules for implementation of Bank Indonesia
Regulation are set out in:
-

circular letter concerning principles for the operation and oversight of BI-RTGS system (i.e.
the circular letter issued by Bank Indonesia as the regulator of of payments and settlement
systems in Indonesia);
circular letter concerning the operation of BI-RTGS system (i.e. the circular letter issued by
Bank Indonesia as BI-RTGS operator);
circular letter concerning processing of payments in BI-RTGS system as concerns for
protection for customers of BI-RTGS participating banks; and
circular letter concerning the usage fees for BI-RTGS system.

In order to ensure the uniformity for inter-bank funds transfers practices among BI-RTGS
participating banks, the participating banks have developed a set of BI-RTGS Bye-laws. The
participating banks, when making inter-bank funds transfers through BI-RTGS system, have to
conform to the Bye Laws. The Bye-Laws was created by all banking associations consisting of
HIMBARA (Himpunan Bank Pemerintah or association of state-owned banks), PERBANAS
(Persatuan Bank Swasta Nasional or association of private national banks), association of foreign
banks, association of joint venture banks and ASBANDA (Asosiasi Bank Daerah or association of
regional/provincial banks). As the follow up to the Bye Laws, the banking associations have
formed a Committee (i.e. the Bye-Laws Committee) to resolve disputes and/or problems that may
arise between BI-RTGS participating banks with respect to interbank funds transfers settled
through BI-RTGS system, and/or to resolve non-compliance actions of any bank. The Bye-Laws
specifies as well certain codes of conduct of interbank funds transfers settled through BI-RTGS
system for the purpose of avoiding gridlock. Furthermore, the committee is also responsible to
make, repeal and/or amend the Bye-Laws.
The committee has also issued a Bye-Law for PVP settlement of IDR-legs of domestic interbank
USD/IDR FX trades settled through USD/IDR PVP settlement mechanism of BI-RTGS system. It
is the uniform custom of practices for BI-RTGS participating banks settling their interbank
USD/IDR FX transactions through USD/IDR PVP settlement mechanism of BI-RTGS system.
3.2.2. Participation
All commercial banks required to hold current account with Bank Indonesia are BI-RTGS
participants. There are 5 (five) non-bank institutions which are also BI-RTGS participants, i.e.
Indonesia Postal Company (PT. POS), Indonesia Central Securities Depository Corporation (PT.
KSEI), Indonesia Export Financing Institution (LPEI), and 2 (two) domestic interbank ATM

17

Indonesia
switching/network providers14, since their services requires settlement services at the inter-bank
level, and Bank Indonesia considers that the final settlement of their payment services have to take
place in the central bank money
There are 2 (two) types of the participant, i.e. the direct participants which have BI-RTGS terminal
at their premises and the in-direct participants which do not have BI-RTGS terminal at their bank.
Both types are required to have the current/settlement account held at BI-RTGS Central Computer.
As of April 2009, there are 154 banks and non-bank institutions participating in BI-RTGS.
3.2.3. Types of transactions
BI-RTGS system handles all IDR large-value payments including:
-

for settlement of interbank IDR money market transactions;


for settlement of payment-legs of transactions of IDR denominated securities held with BISSSS;
for settlement of IDR-legs of domestic interbank FX against IDR trades;
for settlement of Bank Indonesia monetary operations;
payments of large and time critical government transactions; as well as
funds transfers of large and time critical transactions of commercial banks customers.

BI-RTGS system also settles the net figures from SKNBI and the clearing results from a domestic
inter-bank ATM switching15 in the country.
BI-RTGS system applies FIFO with Priority principle. The priorities range from 01 to 99. All
inter-bank funds transfers, either purely inter-bank funds transfers including for settlement of all
inter-bank financial markets transactions or of commercial banks customers, are assigned with
the priority level 99, which is defined as the normal payment, while the priority payments are
payments between the participating banks and Bank Indonesia for, such as, settlement of the net
figures from SKNBI, commercial banks cash withdrawals, settlement of Bank Indonesia
monetary operations, as well as payments of the government transactions in which accounts of the
government are held with Bank Indonesia accounting system.
3.2.4. Operating hours
BI-RTGS System operates in daily basis for working days and several non working days with
limited services. The operating hours are as follow:
Table 2: Operating hours of BI-RTGS system

PT Artajasa operating called ATM Bersama ATM switching whose members are 72 commercial banks
including 4 stated owned commercial banks, and PT Finnet Indonesia operating called ATM Link ATM
network whose members are only 4 stated owned commercial banks
15
It is ATM Bersama operated by PT. Artajasa
14

18

Indonesia
No.

1
2

Activities

Window Time

BI-RTGS Central Computer opens


Window times of settlement of BI-RTGS transactions
a. Funds transfers for SKNBI pre-funds
b. Funds transfers for topping up SKNBI pre-funds
c. Funds transfers for commercial banks cash
withdrawals
d. Funds transfers from commercial banks for
transferring tax payments collected from tax payers to
the government account held with BI accounting
system
e. Customers interbank funds transfers
f. Interbank funds transfers
g. USD/IDR PVPs settlement of IDR-legs
h. Settlement of net figures of SKNBI
i. Settlement of BI monetary operations

(Western Indonesia Time)


06:30
06:30 08:00
08.15 16.00
06:30 11:00

06:30 16:30

06:30 16:30
06:30 17:00
06:30 16:30
11.00 17.00

3
4
5
6
8

Cut-Off Warning
Interbank Cover Position Transactions
Pre Cut-Off Time
Cover Position Transactions with Bank Indonesia
Cut-Off Time

06.30 17.00
17:00
17:00 18:00
18:00
18:00 18:30
19:00

3.2.5. Sources of liquidity


The main sources of liquidity in BI-RTGS system during the operating hours are:
- opening balances of BI-RTGS participants;
- funds received from other BI-RTGS participants during the operating hours; and
- intra-day collateralized liquidity facility from Bank Indonesia (called FLI16).

16

It is called in Bahasa Fasilitas Likuiditas Intrahari

19

Indonesia
3.2.6. Management of credit risk of FLI
FLI is an intra-day liquidity funding provided by BI-RTGS operator in order to smooth settlement
of BI-RTGS transactions. It is required that BI-RTGS participating banks that need FLI must
provide suitable collateral as being liquid should a default happens. Such suitable collateral can be
in the forms of SBI or SBN, in which the value of such collateral is marked to market on a daily
basis, and the haircut is applied.
The use of FLI is charged according to hours of the use of FLI and based on the business days
morning rate of the inter-bank overnight money market.
If FLI can not be repaid by the end of BI-RTGS operating day, FLI will be transformed into Bank
Indonesia overnight lending facility which is charged at Bank Indonesia lending rate.
3.2.7. Settlement mechanism and management of risk
BI-RTGS system settles all payments on a gross basis and in real time, subject to availability of
covering funds of the paying-participating banks, during the settlement hours. BI-RTGS system
accepts the future-dated payment instructions for settlement on the designated value date.
In BI-RTGS system, the payment orders are temporarily held in the centrally located queue if
covering funds of the paying-participating banks are insufficient, and processed on the basis of the
FIFO rule subject to the assigned priorities upon availability of the covering funds (i.e. no
queued payments of a particular priority will be settled until all those of a higher priority have
been settled).
BI-RTGS provides its participants and users of BI-RTGS operator with the queue maintenance
facility for:
-

reordering sequences of queued payments within a priority level;


changing priority codes of queued payments; and
Cancelling payments in queue.

Assigned users of BI-RTGS operator can perform the queue maintenance for both priority
payments as well as (normal) inter-bank funds transfers in queue. BI-RTGS participating banks
can only reorder sequences of their outgoing (normal) inter-bank funds transfers in queue or cancel
them. Should BI-RTGS participating banks need to perform queue maintenance intervene on their
priority payments, i.e. cancelling their cash withdrawals, they can contact BI-RTGS operator to
perform requested queue maintenance on their priority payments.
Moreover, BI-RTGS system has a feature to detect and resolve grid locked payments in queue.
The gridlock resolution, which applies FAFO offsetting/optimization algorithm while keeps on

20

Indonesia
respect the priority payments17, can be performed automatically or upon command by authorized
users of BI-RTGS operator.
In addition, BI-RTGS system provides its participants with the parameterized facility to monitor
the payments in queue, both the outgoing funds transfers in queue and the incoming payments in
queue. However, in order to prevent a moral hazard problem (i.e. not providing BI-RTGS
participating banks with incentives to deliberately delay the submission of funds transfer
instructions to the system in order to economize on the use of their own liquidity by relying on the
incoming funds transfers from other participants, which in turn could lead to gridlock with
multiple participants holding back their payments until they receive payments from others), BIRTGS only provides its participating banks with the facility for monitoring their outgoing funds
transfers in queue.
In a SEBI regarding Principles for the Operation and Oversight of BI-RTGS system, BI-RTGS
participants are encouraged to follow the graduated payment schedule in order to prevent an
accumulation of the payments submitted to BI-RTGS system closing to the end of BI-RTGS
operating hours. The graduated payment schedule specifies a certain percentage of the payments
volume submitted within certain time intervals during BI-RTGS operating hours.
3.2.8. Technical aspect
The technical aspects of BI-RTGS Systems are as follow:
Technical item

Description

Connection between the system

CPU to CPU connection

and participant
Message format
Application Layer
Presentation and layers
Transmission layers
Network layers
Data-link layers
Physical layers
Back up system at primary site
Back up system at back site
Time it takes to switch over from

Proprietary message format


Proprietary
Message oriented proprietary
SNA (LU6.2)
SNA
SDLC
Leased line
Hot standby
Hot standby
2 hours

the production system to the

17

With the exception that settlement of the normal funds transfer(s) in queue increases the liquidity position
of the participant(s), thus making the participant(s) better off and increasing its/their ability to settle their
priority payment(s) in queue

21

Indonesia
Technical item

Description

backup system/site
Average online availability for last

99.99%

year (2009)
The routine procedure for periodical BI-RTGS data back-up is in place. BI-RTGS system has the
fully equipped alternate processing site, documentation of the business continuity plan including
procedure for the crisis management and information dissemination. The business contingency
arrangements are regularly tested. BI-RTGS operator provides BI-RTGS terminals at its premises
should there are the participating banks having a communication network problem from their site
to BI-RTGS Central Computer. BI-RTGS system has been audited by an independent international
security auditor to ensure high degree of the security features of BI-RTGS system. Bank Indonesia
adopts a policy to have the system re-tested at least once a year.
3.2.9. Pricing policy
BI-RTGS system applies a time-varying tariff in order to encourage early submission of the funds
transfers, charging half price for the funds transfers sent before 15:00 pm (local time).
3.2.
3.3.1.

Interbank Retail Payments Systems


SKNBI for interbank retail payments

SKNBI which was put into operation in 2005 is an Indonesia system-wide important payment
system (SWIPS) connecting directly 109 local clearing houses throughout Indonesia. It is an interbank retail payments system in the country, which applies a deferred multilateral net settlement
mechanism.
The daily average number and net amount of interbank retail payments cleared in SKNBI in 2010
reached about 366 thousand payments and IDR 7 trillion respectively.
3.3.1.1.

Institutional framework

Besides operating SKNBI, Bank Indonesia also operates 39 clearing houses located in big cities in
Indonesia. There are other clearing houses in 70 cities operated by the branches of commercial
banks, as appointed by Bank Indonesia, in which Bank Indonesia provides them with the
computers and financial aid to cover the overhead cost.
3.3.1.2.

Participation

22

Indonesia
Membership in SKNBI is for branch and sub-branch offices of commercial banks. There are 2
(two) types of connectivity for SKNBI members, i.e. the on-line connectivity and the off-line
connectivity, with regard to types of the participants clearing terminal connectivity to SKNBI
central computer. For the on-line participants they send their data of outgoing transfers to SKNBI
central computer directly, while for the off-line participants they send their outgoing transfers to
SKNBI central computer through the local clearing house.
SKNBI participants in year 2009 consisted of 2,193 offices of the commercial banks in Indonesia.
3.3.1.3.

Types of transactions

SKNBI has 2 (two) clearing processes, i.e.:


- the multilateral netting for the interbank debit payments (i.e. the debit clearing); and
- the multilateral netting for the interbank credit funds transfers (i.e. the credit clearing).
The debit clearing is conducted in each local clearing house along with the exchange of the
paper-based debit instruments (i.e. cheques, bilyet giros, and debit notes18), and SKNBI provides
the inter-city clearing services for the debit clearing. The credit clearing runs the multilateral
netting for the paperless interbank credit funds transfers on a nationwide basis.
From 2002-2010, the debit instruments (i.e. cheques, bilyet giros and debit notes) accounted for
the biggest share of the SKNBI volume (58%), while the electronic credit funds transfers
accounted for 42% of the SKNBI volume. Bilyet giro has the biggest share of the debit
instruments used and processed in SKNBI amounting to 47%, followed by checks (11%).
All these documents had to be expressed in Rupiah currency with 100% face value and had to
have matured by the time of clearing.
3.3.1.4.

Operating hours

SKNBI operates in normal working days and several holidays with limited services.
Window Time of SKNBI
No.

1
2

Activities

Window Time

SKNBI Central Computer opens


Window times of processes in SKNBI
A. Clearing for electronic interbank credit funds transfers

18

(Western Indonesia Time)


6:30

Debit Note is a document submitted by a bank for the purpose of collection from another bank, in which
since 1998, its value for the inter-bank debit payments has been limited to IDR10 millions.

23

Indonesia
No.

Activities

Window Time
(Western Indonesia Time)

Morning

06:30 - 08:00
Submission of prefund
Submission of toping up of prefund
Submission of electronic interbank credit funds 08:15 - 12:00
transfers
08:15 - 11:30
Early warning of the national net positions
Settlement (interfacing the net positions to BIRTGS for posting to the participating banks
settlement account held at BI-RTGS system)
08:15 - 11:45
Afternoon
12:00 - 12:30
Submission of electronic interbank credit funds
transfers
Submission of toping up of prefund
Early warning of the national net positions
Settlement (interfacing the net positions to BIRTGS for posting to the participating banks
settlement account held at BI-RTGS system)
12:45 - 15:30

08.15 - 16.00
12:45 - 15:45
16:00 - 16:30
B. Clearing for paper-based debit payments

Submission of prefund
Submission of electronic interbank debit transfers
Early warning of the national net positions
Submission of topping up of prefund
Settlement (interfacing the net positions to BIRTGS for posting to the participating banks
settlement account held at BI-RTGS system)

08:15 - 15:00
08:15 - 15:10
08.15 - 15.30
16.30 - 17:00
20:00

Cut Off

3.3.1.5.

06.30 - 08.00

Settlement

24

Indonesia
Prior to the settlement, SKNBI generates electronically the early national net positions of all
SKNBI participating banks, in which each SKNBI participating bank can view via its SKNBI
member terminal the national net positions of both its debit and credit clearing results and each
SKNBI member (i.e. each branch/sub-branch office) of the participating banks obtain the report of
its local debit clearing. Settlement of the net positions on a nationwide basis of both debit and
credit clearing is performed at the pre-determined hours by interfacing data of the national net
positions of all SKNBI participating banks (also as BI-RTGS participating banks) to BI-RTGS
system for posting to SKNBI/BI-RTGS participating banks settlement account held at BI-RTGS
system.
3.3.1.6.

Risks and risk management measures

According to Core Principle V of BIS CP-SIPS, in a payment system settling the inter-bank
payments on a multilateral net basis, if the participant is unable to settle, the consequences for the
systems other participants are potentially complex and can create unexpected credit or liquidity
risks. Accordingly, in order to mitigate the risks in such a system to take place including for
preventing the settlement institution from the credit risk due to failure of the participant(s) to settle,
the Core Principle V requires the systems to have a failure-to-settle (FTS) arrangement such as
requiring more financial resources than are needed to complete settlement under normal conditions.
Such additional resources can be deposited by the participants with the settlement institution.
Those deposits have the advantage that they can be readily available to complete the settlement
quickly, which can be especially important in adverse circumstances when the prompt action may
need to be taken.
Since its implementation, SKNBI applies a FTS mechanism in the form of pre-funds. Before
participating in SKNBI in each business day, all SKNBI participating banks are required to
provide the pre-funds for each debit clearing and credit clearing. For the debit clearing, besides the
pre-funds in the form of cash (called cash prefunds), SKNBI participating banks can use their
central bank bills, government securities or/and other securities determined by Bank Indonesia for
their pre-funds (called collateral prefunds). The pre-funds can be topped up/added which can be
performed by each SKNBI participating bank at the pre-determined hours before the settlement to
BI-RTGS system.
3.3.2.

Shared ATM networks/switching services

Most commercial banks in Indonesia operate their own ATM network which connect to one, two
or three domestic interbank (shared) ATM networks and one or two international ATM networks.
The three domestic shared and two international ATM networks are:
-

ATM Bersama which is operated by PT. Artajasa Pembayaran Elektronis and provides the
switching services (i.e. for cutomers interbank credit funds transfers, billing payments and
cash withdrawals) for ATMs of 70 commercial banks and 2 rural banks. All transactions
performed through ATMs of the participating banks are effective immediately (i.e. debiting
and crediting accounts of the participating banks customers take place in real time), and the
multilateral net settlement of the inter-bank positions is done through BI-RTGS system;
25

Indonesia
-

ATM Prima (ATM BCA) which is operated by PT. Rintis Sejahtera (a subsidiary of the
biggest private domestic bank, i.e. Bank Central Asia (BCA)) and provides the switching
services for ATMs of 33 commercial banks. All transactions done through ATMs of the
participating banks are also effective immediately at the customer level, and settlement of the
interbank multilateral net positions takes place through the participating banks account held at
the appointed commercial bank (i.e. BCA);
ALTO which is operated by PT. Daya Network Lestari and provides the switching services for
ATMs of 14 commercial banks and 1 rural bank. All transactions performed through ATMs of
the participating banks are effective immediately at the customer level, and settlement of the
interbank multilateral net positions uses the commercial bank money (through the participating
banks account held at Standard Chartered Bank in Indonesia);
Cirrus, an international ATM network of Mastercard having member of 13 commercial bank
and PT Artajasa;
Plus, an international ATM network of Visa International which has member of 26 commercial
banks.

Not all of the shared ATM networks are yet interlinked. For transaction using the ATM Network,
when cardholder performs a transaction at an ATM of another bank in the same network, ATM
Network switches the transaction to the issuing bank for authorization, which involves verification
of the PIN, checking that sufficient funds are available and authentication of the transaction. The
issuing bank then sends its response back via ATM Network which switches it to the ATM being
used and the transaction is completed. If a cardholder performs a transaction at his own banks
ATM, the transaction does not require any switching, as the issuing bank is able to directly
approve the transaction.
For Cirrus and Plus, the transactions are respectively cleared by Mastercard and Visa on a similar
principle as Indonesia ATM network. When currency conversions are necessary, the London
Interbank Rate is used. Settlement for these transactions is conducted through the respective card
schemes bank.
3.3.3.

EFT POS networks/switching services

EFT POS transactions acquired on EFT POS Network terminals is routed for processing. The
routing arrangements will vary depending on the card type used in transaction:
-

For debit cards issued in Indonesia, EFT POS networks dispatches the transaction for
authorization to the issuing bank. The issuing bank verifies the PIN, checks the availability of
funds, verifies that the transaction is not fraudulent, debits the cardholders account and
informs the merchants of the successful transaction, who in turn delivers the goods/services to
the cardholder.
For maestrocards and visa, those EFT POS network routes the transaction to the card processor.
The card processor on behalf of the issuing bank, check the payment limit, verifies that
transaction is not fraudulent and authorizes the merchant to deliver the good/services.

3.3.

Bank Indonesia Government Electronic Banking (BIG-eB)

26

Indonesia
Bank Indonesia Act stated duty of Bank Indonesia related to the government i.e. Bank Indonesia
holds government cash (treasury) and maintains government accounts. Based on the Act, Bank
Indonesia has a role as the Governments Banker providing banking services to the government
covering mechanisms of government receipts, expenditures and debt.
With regard to providing banking services to the government, Bank Indonesia implemented
Government electronic banking application on December 2007 namely BIG-eB. BIG-eB is an
electronic banking system provided by Bank Indonesia to the government (Ministry of
Finance/MoF) to facilitate MoF in accessing information and perform transactions online and
electronically over government accounts in Bank Indonesia.
The objectives of implementing BIG-eB are to provide online and real-time information on
government accounts held at BI to support implementation of Treasury Single Account (TSA), to
support prompt report generation and back office processing in MoF, to speed up settlement of
government transactions, to accommodate transaction interfaces between system in MoF and Bank
Indonesia, and to support coordination between fiscal policy in MoF and monetary policy in BI.
As an electronic banking, BIG-eB is an extension of core banking application in Bank Indonesia
called BI-SOSA 19 which maintains and processes transactions of Bank Indonesia non-bank
customer. Payment instructions from BIG-eB (for inquiry, report, financial transactions) are routed
to BI-SOSA for further processing, including interfaces with other systems e.g. BI-RTGS, SKNBI
and SWIFT.
3.4.

Major ongoing and future projects

3.5.1. Enhancements in Indonesia LVPS: 2nd Generation BI-RTGS System


While current BI-RTGS system has achieved its objective of mitigating settlement risk by
providing its participants with a means of settling their large-value payments in real time with
finality, settlement of the funds transfers on such a gross basis settlement system imposes
relatively high liquidity requirements on the participants.
It has resulted in an increase in value of the funds transfers settled through BI-RTGS system since
new financial products settled through BI-RTGS system increased, accompanied by more active
inter-bank financial markets, such as the bond market, as well as growth in the economic activities,.
Accordingly, it is more likely to lead to higher and higher liquidity requirements for settlement
in BI-RTGS system in upcoming years. According to statistics of the payments settled through BIRTGS system from year 2004 until 2009, the average annually growth rate of volume and value of
the payments settled through BI-RTGS system reached by 17,6% and 15.6% respectively.

19

Bank Indonesia Sentralisasi Otomasi Sistem Akunting (BI-SOSA) or Bank Indonesia Automated
Centralized Accounting System is an application for book keeping in Bank Indonesia that record
the general ledger of Bank Indonesia. However, it also record the balance of Government
accounts in Bank Indonesia as part of the book keeping function.
27

Indonesia
In addressing such higher and higher liquidity needs for settlement in BI-RTGS system, It is
important to improve the efficiency in liquidity use and management of BI-RTGS system.
Moreover, since there have been new developments in large-value payments systems in some
economies 20 , such as incorporation of efficient use of liquidity features of net settlement
systems into RTGS systems in order to economize on use of liquidity for settlement in RTGS
systems, such developments become also one of the key drivers of enhancing settlement
arrangements in BI-RTGS system with the objectives:
-

lowering liquidity requirements for settlement in 2nd Generation BI-RTGS system, but
keeping on achieving the settlement risk reduction benefits of RTGS systems in 2nd
generation BI-RTGS system.

Adoption of such liquidity saving mechanisms in BI-RTGS system will be undertaken by


incorporating offsetting mechanisms. The objective of liquidity saving mechanisms is to provide
2nd Generation BI-RTGS system with a means for immediately releasing as many as the payments
in queue. There will be 2 (two) offsetting mechanisms to be adopted.
Firstly,bilateral offsetting will offset inter-bank funds transfers in queue of the pair of BI-RTGS
participating banks. The offsetting will run continuously as long as there are the events to trigger
the bilateral offsetting. The events could be entering a new inter-bank normal funds transfer into
the system or an increase in balances of BI-RTGS participating banks.
Since 2nd Generation BI-RTGS system still will apply FIFO with Priority principle, bilaterally
offsetting inter-bank normal funds transfers will not be settled in the case that priority
payment(s) is(are) queued. The only exception is that those offsetting inter-bank normal funds
transfers can be executed before if and only if this will allow those offsetting funds transfers to be
settled and the overall effect of this bilateral offsetting will be a liquidity increase for the
participant/the pair of participants that can be used for settlement of priority payments in queue.
Secondly, multilateral offsetting mechanisms will offset inter-bank funds transfers in queue of
multiple BI-RTGS participating banks. Since 2nd Generation BI-RTGS system still will apply
FIFO with Priority principle, multilateral offsetting algorithms will respect priority levels and
sequences of payments in queue. The multilateral offsetting will run from time to time at short
intervals (or at pre-determined times). The multilateral offsetting will consist of more than one
algorithms (for instance all-or-nothing multilateral offsetting and partial multilateral offsetting)
that will perform in sequence at the pre-determined times when the multilateral offsetting will run.
The multilateral offsetting will also offset payments in queue which cannot be processed or failed
to be processed with bilateral offsetting.

Through the incorporation of liquidity saving mechanisms into RTGS systems, i.e. offsetting
mechanisms (bilaterally or/and multilaterally), which have been applied in: Euro area RTGS system
(TARGET 2), Japan BOJ-RTGS Next Generation, Canada RTGS system (LVTS), Switzerland RTGS
system (SIC), Australia RTGS system (RITS), New Zealand RTGS system (ESAS), South Korea RTGS
system (BOK Wire), and Hong Kong RTGS system (CHATS)
20

28

Indonesia
Both bilaterally and multilaterally offsetting payments will proceed for settlement as long as the
net balances steamed from the offsetting mechanisms could be covered with the debtors available
funds. The settlement will take place on a gross basis, and notification message of settlement for
each individual offsetting payment will be generated.
The other enhancement in 2nd Generation BI-RTGS system is to provide BI-RTGS participating
banks, which are already SWIFT member and have SWIFT terminal at their premises (i.e. 66
commercial banks), with SWIFT access to the host computer of 2nd Generation BI-RTGS system.
However for the small sized banks, which are not SWIFT members, there will be secure Virtual
Private Network (VPN) access to the host computer of 2nd Generation BI-RTGS system. The user
interface at banks site to access 2nd Generation BI-RTGS system, will be web-browser, and the
message format of BI-RTGS payments transmitted through the secure VPN is SWIFT message
format.
Such advantages as using the worldwide communication network with standard financial message
formats are the key driver of providing SWIFT access in 2nd generation BI-RTGS system.

29

Indonesia
4. Post-trade processing, clearing and securities settlement in Indonesia
4.1.

General Overview

Trading in Indonesian capital market could be performed through exchange or over the counter.
Trading through exchange is administered and managed by Indonesian Stock Exchange (IDX)
with Jakarta Automated Trading Systems Next G (JATS). The clearing for securities transactions
in Indonesia is processed by PT. Kliring Penjaminan Efek Indonesia (KPEI). The central
securities depository for government securities is Bank Indonesia, while for corporate securities is
PT. Kustodian Sentral Efek Indonesia (KSEI). In Indonesia, IDX is the sole trade repository for
all of securities transactions.
4.2.

Post Trade Processing Systems

4.2.1. Trading and Confirmation


4.2.1.1.

Institutional Framework

IDX provide several systems for trading and trade confirmation such as JATS for equity trading,
Fixed Income Trading System (FITS) for fixed income debt securities. The trading of securities is
regulated by Capital Market Act, Government Securities Act, and Sharia Government Securities
Act.
4.2.1.2.

Participation

All of exchange members could become direct participant in the systems. The exchange members
consists of securities companies that already obtain permission from BAPEPAM LK.
4.2.1.3.

Type of Transactions

With the two systems, IDX could provide services for stock trading and bond trading through
exchange floor for regular market, cash market, negotiation market, and over the counter
transactions.
4.2.1.4.

Operation of The Systems

All transactions in the Exchange are processed in JATS. Only the Exchange Members, who also
become the members of the Indonesian Clearing and Guarantee Corporation (KPEI), can input the
orders into the JATS. The Exchange Members are responsible for every transaction they make in
the Exchange.
Exchange Members have the responsibility to settle all the transactions they've made, as stated in
the Exchange Transaction List (DTB), including the transactions that occur because of (i) the
errors made by the supporting equipment or Remote Trading applications of the Exchange
30

Indonesia
Member, except for the errors made by the JONEC software that was provided by the Bourse;
and/or (ii) the mistakes caused by the carelessness of the traders when inserting the purchase and
sell orders into the JATS; and/or (iii) the mistakes caused by the carelessness of the IT Officer-RT
when operating their supporting equipments or applications; an/or (iv) the invalid access into the
Exchange Members supporting equipments or applications.
Securities Trading in Regular, Cash and Negotiation Markets are opened during the trading hours
on every business day by reffering to the JATS Timer.
The buying and selling price orders entered into the JATS have to be in a certain price range. If a
Broker inputs a price order above or below the stock's price range, the JATS will automatically
reject the price order.
JATS will automatically do the Auto Rejection to the price orders input into the JATS at the
Regular and Cash Markets if:
1. The selling or buying order is smaller than Rp 50 (fifty rupiah);
2. The selling or buying orders input into the JATS are more than 35% (thirty five percent) above
or below the Reference Price for stock price that ranges from Rp 50 (fifty rupiah) to Rp 200
(two hundred rupiah);
3. The selling or buying order input into the JATS are more than 25% (twenty five percent) above
or below the Reference Price for stock price that ranges from above Rp 200 (two hundred
rupiah) to Rp 5,000 (five thousand rupiah);
4. The selling or buying order input into the JATS are more than 20% (twenty percent) above or
below the Reference Price for stock price that is more than Rp 5,000 (five thousand rupiah).
The settlement period for equities market transactions are as follow:
Market Segmentation
Regular market
Cash Market
Negotiated Market

4.2.1.5.

Settlement Period
The third Exchange day after the trade is executed (T+3)
The same day as the trade (T+0)
Based on the agreement between the Seller and the Buyer

Pricing

For every transaction, the Exchange Members have to pay fees to the IDX, KPEI and KSEI based
on the value of each transaction:
Type of Transaction
Regular Market and
Cash Market

Transaction Fees
0.03%

Negotiated Market

0.03% or pursuant to the


Exchange Policy
0.005%

Bond

31

Guarantee Fund
0.01%

Tax
VAT and
other tax
obligation

Indonesia
4.2.2. Trade Repository
4.2.2.1.

Institutional Framework

BAPEPAM-LK appointed IDX as the trade repository for securities market in Indonesia. Based
on the appointment, IDX prepare the required systems as the trade repository for all of equity and
debt securities transactions.
4.2.2.2.

Participation

All of equity and debt securities transactions shall be reported to IDX as the appointed trade
repository. Therefore, all securities companies and custodian banks are direct participants of the
trade repository system.
4.2.2.3.

Type of Transactions

All equity and debt securities transactions shall be reported to the trade repository except for
exchange trading which is automatically captured from the trading system (JATS Next G). Based
on BAPEPAM-LK regulation, he transactions of debt instruments that should be reported to the
trade repository including outright, donation, inheritance, barter, legal transfer, merger and
acqusition, lending and borrowing, repurchase agreement/repo, in house transfer, buy back,
redeem, convertion, and guaranty.
4.2.2.4.

Operation of The Systems

Penerimaan Laporan Transaksi Efek (PLTE) system or Securities Transactions Reporting System
is used to obtain report from exchange members, securities companies, and custodian banks. For
transactions performed through exchange floor, the information is obtained directly from the
exchange. While for transactions performed outside the exchange floor should be reported by the
parties to the trade repository using the PLTE.
4.3.

Central Counterparties and Clearing System

4.3.1. Clearing System


4.3.1.1.

Institutional Framework

Clearing and Guarantee Corporation Inc. (PT. KPEI) is the appointed clearing and central
counterparty for Indonesian capital market. PT. KPEI is established for the purpose of performing
CCP functions by providing clearing and guarantee for settlement of Indonesia Stock Exchange
(IDX) traded securities. PT. KPEI makes rules on the clearing and guarantee for settlement of onIDX traded securities, as well as the fees of its services. The rules of PT. KPEI amendments
thereof, will only become effective when approved by BAPEPAM-LK.
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Indonesia
PT. KPEI is the only Indonesia CCP that performs the following functions:
-

recording the securities trades performed through IDX (Bursa Efek Indonesia/BEI) securities
exchange system;
computing the net positions of each participant of BEI/PT. KPEI;
applying adequate risk management measures with regard to the positions of each participant;
ensuring novation by substituting itself to sellers and buyers and taking on their respective
obligations; and

transferring the net settlement positions to depository and settlement system of PT. KSEI (i.e.
Central Depository and Book Entry Settlement System/C-BEST) for the settlement, in which
settlement of the cash-legs takes place in the payment settlement banks (i.e. 4 (four) commercial
banks).
4.3.1.2.

Participation

Currently, KPEI apply direct clearing member (DCM) for all exchange members that runs
securities brokerage services.
4.3.1.3.

Type of Transactions

KPEI provides clearing and central counterparties services for exchange trade transactions,
novation, guarantee, and securities lending and borrowing.
4.3.1.4.

Operation of The Systems

KPEI operates electronic Clearing and Guarantee System (e-CLEARS) for clearing of equities and
Electronic Bonds Clearing System (e-BOCS) for clearing of debt instruments. Also, to monitor
the risk profile of clearing members, KPEI uses Automated Risk Management System (ARMS).
4.3.1.5.

Pricing

The fees for clearing services are as follow:


Type of Transactions
Stock Exchange Transaction for stock and regiustered bonds
Stock Exchange Transaction for bearer bonds
Stock Exchange Transaction for warrants and rights issues

4.4.

Transaction
Fees
0.009%
0.000%
0.0045%

Guarantee
Fund
0.01%

Securities settlement systems

4.4.1. Settlement system for the government securities and instruments of Bank
Indonesia open market operations
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Indonesia
Settlement and depository of securities issued by the government and settlement of instruments of
open market operations by Bank Indonesia is undertaken in BI-SSSS which is operated by Bank
Indonesia. Besides functioning for matching and settlement of the securities transactions as well as
for the securities depository, BI-SSSS also provides the facilities for transactions with Bank
Indonesia, i.e. for:
-

Open Market Operations (OMO);


Bank Indonesias collateralized liquidity/funding facilities for banks; and
Auction of the government securities in the primary market.

Technically, BI-SSSS has 3 (three) main components:


-

Automatic bidding system central computer (BidCC) at BI-SSSS operators site that functions
to conduct transactions with Bank Indonesia;
BI-SSSS central computer (SCC) at BI-SSSS operators site that functions for matching and
settlement of BI-SSSS securities transactions as well as the securities depository; and
BI-SSSS terminal (ST), as the front-end system at BI-SSSS members site, containing
automatic bidding (ABS) module and scripless securities transfer (SSTS) module, which are
used by members to conduct transaction with Bank Indonesia and to settle their securities
transaction.

There are 2 (two) methods of settlement in BI-SSSS, i.e.:


-

DVP settlement, in which settlement of the cash-legs of securities transactions takes place in
BI-RTGS system; and
free-of-payment (FOP) settlement.

Besides providing the settlement and custodial services, BI-SSSS provides services for coupons
and principals payments.
BI-SSSS participants include the ministry of finance, commercial banks, sub-registries, money
market brokers, securities companies, and Bank Indonesia. MOF as issuer of the government
securities uses BI-SSSS for monitoring the government securities auction as well as for monitoring
the outstanding of the government securities.
4.4.2. Settlement system for securities issued by the private sector
Settlement function for securities issued by the private sector, i.e. stocks and corporate bonds, and
transacted on IDX or over the counter (OTC) is performed by PT. KSEI through its securities
settlement and depository system, i.e. C-BEST. As the last stage in the securities processing
chain21, C-BEST ensures both the delivery and payment of the securities. C-BEST, as the central

21

The securities trading services is provided by IDX, and the multilateral netting and settlement guarantee functions
for the on-exchange (IDX) traded securities is provided by Indonesian Clearing and Guarantee Corporation (KPEI)

34

Indonesia
securities depository, holds the securities accounts, while the cash accounts used for settlement of
the cash-legs are held with 4 (four) commercial banks as the payment settlement bank22.
For stocks, trading on IDX is divided into four markets: (i) the regular market, for which
settlement takes place on T+3; (ii) the immediate market, for which settlement is conducted on
T+1; (iii) the cash market, for which settlement is carried out on the same day (T+0); and (iv) the
negotiated market, for which the timing of settlement is decided by the seller and buyer. Securities
transactions are, by definition, locked-in, with the understanding that they are to be settled
according to market category. At the end of each business day, the trading data on IDX is
delivered to PT. KPEI, where it performs the netting process. KPEI guarantees the trading
outcomes, with the exception of those in the negotiated market. On the designated settlement date,
PT. KSEI settles the net positions of the regular-market, immediate-market and cash market. PT.
KSEI also settles on a gross basis the negotiated-market trades. Settlement of the cash legs of IDX
traded stocks is conducted by the appointed 4 (four) settlement banks.
For corporate bonds, the transactions are performed OTC, in which the computer system displays
quotations for bid and offer, as well as the revised and cancelled quotations during trading hours.
Settlement of the transactions conducted two days after the trades (T + 2) is executed by PT. KSEI.
4.5.

Recent development

4.5.1. Enhancements in BI-SSSS: 2nd Generation BI-SSSS


As a securities settlement system, BI-SSSS functions for settlement and depository of the
government securities and Bank Indonesia open market operations instruments as well as the
collaterals for Bank Indonesia funding/liquidity facilities. Along with 2nd Generation BI-RTGS
system, Bank Indonesia has been developing as well 2nd Generation BI-SSSS in order to increase
the performance and contain the future increasing volume of BI-SSSS transactions , anticipate
changes in the future policies and dynamics with regard to product developments in the securities
markets, and enhance compliance of the system operation with the international standards and
accepted best practice (e.g. the related ISO standards and CPSS-IOSCO recommendations for
securities settlement systems), as well as facilitate the cross border transactions efficiently.
Accordingly 2nd generation BI-SSSS will have new features such as the securities lending and
borrowing, collateral management and the variable account structure denominated other than IDR
and able to be the central registration. 2nd Generation BI-SSSS will run on the same platform as 2nd
Generation BI-RTGS system.

22

i.e. using commercial bank money (i.e. Bank Mandiri, BCA, CIMB Niaga, and Bank Permata) to settle the ultimate
payment obligations

35