Agusman, executive director of the Head of the Financial Market Deepening Department, remarked in Jakarta on Tuesday that the regulation was enacted to intensify supervision over all transaction managers in the money and foreign exchange markets.
Apart from becoming a legal entity, ETP service firms may also solely be owned by foreign companies, with a maximum 49 percent ownership share.
"These rules are aimed at maintaining integrity in the money and foreign exchange markets in addition to streamlining the financial market infrastructure that is integrated and in accordance with global standard practices," Agusman elaborated.
The regulations on the parties conducting transactions in the money and foreign exchange markets are stipulated in BI Regulation Number 21/5 / PBI / 2019, effective from April 29, 2019.
However, the Central Bank will not right away pressurize ETP service providers to make adjustments in line with these regulations and has offered a nearly three-year period to enable transitioning to adhere to these rules.
In Indonesia, ETP, Money Market Brokerage Companies (PPU), Banking Systematic Internalists (SI), and Exchangers are the parties conducting transactions on the money and foreign exchange markets. In addition to the ETP, BI also necessitates PPU to become a limited-liability firm, with a paid-up capital of Rp12 billion, whereas SI and Exchange Executors each will be regulated by the Financial Services Authority and the Commodity Futures Trading Supervisory Agency (Bappebti)
In addition to necessitating a company to become a limited-liability firm, have a specific paid-up capital, and apply maximum foreign ownership share, BI has tightened other rules for ETP in the form of the need to clear two stages to obtain business licenses. For the feasibility of commissioners, directors, and shareholders, the BI will evaluate the ETP.
After the PBI, the BI will issue technical guidelines for the ETP in the Board of Governors' Member Regulation (PADG) on October 31, 2019.