Indonesian Bourse Facilitates Stocks Triparty Repo

JAKARTA (TheInsiderStories)Indonesia Clearing and Guarantee Corporation (ICGC) issued triparty repurchase agreement regulation to market players. The agency will be the third party in the repo agreement where seller borrows some funding from buyer with the guarantee of several securities instrument, told senior officer today (03/01).

President Director of ICGC Sunandar stated, for the initial implementation starting Feb. 28, the repo can be done is for stocks instrument.

In the repurchase agreement, the self-regulatory office provides the maintenance of repo contracts, settlement process, marked to market process, margin management, collection and repo rate payments, also income payments like dividends or coupons.

“ICGC as the third party of repo transaction is because no standard services  yet to support implementation of the repurchase agreement transaction based on regulation, although the service itself has already been existed,” he said in a written statement.

He added, the agency assists calculation of the margin adequacy for each participant in mark to market process. The margin payment between seller and buyer is carried out in the form of fund deposits through an appointed bank.

Moreover, ICGC is responsible for administration. It will remind the borrowed funding and repo rate payment collection at the due period. In addition, rights to securities, such as dividends, will be billed to the buyer for seller’ rights, even though the securities is being guaranteed to the buyer.

The implementation stated in ICGC Regulation number X-2 concerning Triparty Repo Facility for the implementation. It follows the previous rules by Financial Services Authority, Regulation number 09/POJK.04/2015 concerning Repurchase Agreement Transaction Guideliness to Financial Institutions.

The regulation said, repurchase agreement transaction requires Global Master Repurchase Agreement documents.

“In the future, it is expected that Indonesia’s repo market can be more attractive with regulation and mechanism based on the existing standard,” Sunandar said.

There is no service fee imposed for 6 months after the triparty repurchase agreement officially implemented. Investors who want to use the service can just contact the securities.

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