Indonesia unveiled new rules for government debt securities auction on the domestic market - Photo by Finance Ministry

JAKARTA (TheInsiderStories) – Indonesia unveiled new rules for government debt securities auction on the domestic market through finance minister regulation PMK number 168/PMK.08/2019. The new rule is a rearrangement PMK number 43/PMK.08/2013, and published as an improvement in the regulation and handling steps in the government debt auctions.

There are some changes in the new rules. In article 2 regarding the auction provisions, the government stipulates that each party can purchase government debt securities on the domestic market via auction. The purchases can be made in Rupiah and/or foreign currencies.

All parties consist of Indonesian citizens and foreign citizens wherever they live, companies, joint ventures, both Indonesian and foreigner wherever they are domiciled, Bank Indonesia, the Deposit Insurance Agency and/or major dealers.

In the previous rules, just local residents could buy debt securities on the domestic market in Rupiah and/or foreign currency. Residents are Indonesian citizens or companies domiciled in Indonesia, as well as Bank Indonesia, and Deposit Insurance Agency. Meanwhile, parties other than residents can only buy debt securities on the domestic market in the Rupiah currency.

Loto Srinaita Ginting, director-general of financing and risk management, explained that the new rules indeed erased the definition of resident and resident registration related to the process of issuing debt securities in domestic currency.

“This is with the consideration that the limitation features in the structure of debt securities products are more appropriate to be contained in terms and conditions and are conveyed at the announcement of the debt securities auction plan,” he said on Wednesday (11/13).

In these new rules, the finance ministry also added a new chapter, Chapter VI on Abnormal Conditions. Abnormal conditions are explained as situations or conditions of disruption and/or damage to hardware, software, communication networks, applications and supporting available information technology facilities.

Related to that, the ministry adds the option of delaying the implementation of government debt securities auctions or additional auctions with certain deadlines. If the settlement process cannot be completed, the government regulates in this regulation that the settlement can still be carried out.

Ginting explained the settlement implementation will continue to be carried out and recorded on the same currency date as the government debt securities auction settlement date and/or the additional auction.

“This is different from the previous provisions, where the auction and/or additional auction will be declared failed if the settlement process cannot be carried out on the settlement date,” he said.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com