Officially launched by BI et al. What is CCP?

Jakarta, CNN Indonesia —

Bank of Indonesia (BI), Financial Services Authority (FSA) and the Indonesia Stock Exchange (BEI) officially launched the new institution Central Counterparty (CCP) Monday (30/9).

Accompanying this announcement were eight banks that were partners and original capital investors in the CCP, namely Bank Mandiri, BRI, BNI, BCA, CIMB Niaga, Bank Danamon, Bank Maybank and Bank Permata.

BI Governor Perry Warjiyo confirmed that the institution was ready for implementation today.

“This is indeed a legacy and this is something that shows we can do it together. Since the global financial crisis, we have not had a primary counterparty for interest rate and exchange rate derivatives (SBNT) as a whole. shut out net“, he said at Thamrin Building, Bank Indonesia, Central Jakarta.

“Today, God willing, CCP SBNT will be working soon. The establishment and development of CCP SBNT will be our legacy again. We will give this to our country and state, to society and especially to the our financial system business,” he added.

Perry explained that CCP is a form of incorporating the mandate of the Financial Sector Development and Strengthening Law (UU P2SK) and the Financial Stability Board of the G20.

With CCP, Perry revealed that the risk of foreign trade and money market transactions through over the counter (OTC) is centralized.

So what is CCP?

CCP is an institution that performs cleaning and innovation activities for the affairs of its members. A CCP places itself between the parties that make transactions to reduce credit risk, liquidity risk and market risk in terms of the rise and fall of prices in the market.

This institution is an important and systemic Financial Market Infrastructure (IPK).

The CCP development road map includes the integration of product development stages, prices and market players and infrastructure, and is related to the implementation stages of the monitoring framework, strengthening status as well as recovery plans and solution which is essential to strengthen CCP to international standards.

CCP will be specifically responsible for regulating the money market and foreign exchange market in Indonesia. The head of BI’s Financial Market Deepening Department, Donny Hutabarat, revealed three benefits of the establishment of CCP.

First, money market and forex transactions become more efficient. That way, trading volume and liquidity are greater, interest rates and exchange rates are determined more effectively, and major market players are more active.

“Of course it will be useful for the recession resultand then later it will promote the efficiency of financing for the economy,” said Donny at a media briefing in Jakarta, Tuesday (24/9).

Second, The creation of a CCP will support the effectiveness of monetary policy and the stability of the rupiah exchange rate, as well as support the maintenance of the stability of the financial system.

Third, CCP facilitates hedging instruments for banking and business, investors, government SBN issuance, business, and national economic financing.

In general, CCP has around 150 partners including BI, OJK, Ministry of Finance, LPS and BUMN as market authority, then market players namely eight large banks and infrastructure providers in the idClear, LSEG and ETP.

[Gambas:Video CNN]

(del/sfr)