To support transactions in each market segment and to increase management flexibility and monitoring of the collateral position in each market, KPEI implements cross collateral mechanism where both online and offline collateral can be used as collateral for one or more than one market type with a specific eligibility percentage to each markets, namely equity, bonds, and securities borrowing and lending markets. Especially for the derivatives market, Clearing Member has a separate collateral in the form of cash in the payment bank.
Online Collateral that can be accepted by KPEI consists of collateral in the form of cash, bonds, stocks and exchange-traded fund (ETF). Collateral can be cash in IDR currency or non-IDR currency (which is allowed in accordance with KPEI provisions) placed in collateral account without any restrictions on the amount of funds pledged. Meanwhile, bonds that can be pledged as collateral are government bonds issued by the Government of Indonesia and corporate bonds with minimum rating BBB listed on IDX and has been administered in KSEI. For stocks and mutual funds (ETF) which can be collateralized in KPEI are all of stocks and ETF listed on IDX and ETFs traded on the IDX. Specifically for collateral in the form of securities, KPEI establishes certain parameters such as collateral restrictions in order to minimize collateral concentration and market risk. The restriction is in the form of percentage of outstanding shares and IDR absolute value.
Meanwhile, offline collaterals accepted by KPEI are collateral in form of minimum cash collateral (MCC) with certain requirements, time deposits, Bank Guarantee and Bank Indonesia Treasury Bills (SBI).
The description for each type of offline collateral is as follows:
a. Time Deposits, with the following requirements:
• Deposit with maturity at least one month;
• Deposits in rupiah (IDR) currency or in foreign currency allowed according to KPEI rules;
• Supporting documents to deposit collateral in the form of time deposits must be verified and validated by the Legal and Membership Division;
• Input of collateral is done when the required documents has been submitted and went through the entire process in the established procedure.
b. Minimum Cash Collateral
• Minimum Cash Collateral is a minimum amount of collateral that must be met by the Securities Company that have just become Clearing Members and Clearing Members. Minimum Cash Collateral have been set in the form of cash or cash equivalents;
• Minimum Cash Collateral is set at 10% (ten percent) of the daily average settlement value (securities delivery and cash payment obligation) each Clearing Member for the past 6 months or at least Rp1,000,000,000,- (one billion rupiah);
• Minimum Cash Collateral in the form of cash/cash equivalents submitted in cash, are managed in the form of time deposits at the Payment Bank appointed by the Clearing Member.
c. Bank Guarantee, with the following requirements:
• Bank Guarantee in the form of rupiah (IDR) currency or the United States dollar (US Dollars).
• Has a maturity of at least 3 (three) months;
• Bank Guarantee is irrevocable and unconditional;
• Bank Guarantee shall be verified and validated by the Legal and Membership Division;
• Collateral in the form of bank guarantee are imposed haircut of 5% of the collateral value.
d. Bank Indonesia Treasury Bills (SBI), with the following requirements:
• Bank Indonesia Treasury Bills that can be used as collateral is Bank Indonesia Treasury Bills which have exceeded the banned period for conducting transactions in accordance Bank Indonesia rules;
• Have a maturity of at least 3 (three) months;
• Supporting Documents for SBI collateral consist of a Power of Attorney to Sell SBI and Revocation Letter of Power of Attorney to sell SBI;
• Collateral in the form of SBI is charged Haircut of 5% of the collateral value.
Further, the online collateral instruments will be administered through e-CLEARS system while offline collateral through Automated Risk Monitoring System (ARMS), and subsequently became the basis for Trading Limit calculation for each Clearing Member.
The collateral value that must be deposited by each Clearing Member depends on the transaction value of each Clearing Member. Clearing Members who wish to trade in large volume, must provide larger amount of collateral. Thus, if the Clearing Member is planning to increase the transaction value, the Clearing Member can make preparations by adding the collateral value.
Concentration limits or collateral limits are set for each stock and bond collateral types deposited by the Clearing Member. Restrictions on the value and volume of shares is set through the limits of absolute IDR value or certain percentage (%) of IDX listed shares, or by limiting the stock value by calculating the amount of market capitalization and stock haircut in accordance with KPEI provisions.
As for the bond restrictions, it is monitored through the bond issuer, if the bonds are issued by the government of Indonesia restrictions on the bonds issued is not required, and if the bonds are issued by corporates, the restrictions is stipulated based on the bonds rating.
Eligibility agunan merupakan penerapan dari cross collateral dimana satu agunan dapat dijadikan agunan untuk satu atau lebih dari satu jenis pasar pada transaksi bursa. KPEI menerapkan eligibility agunan atas agunan online maupun offline pada setiap pasar dengan ketentuan sebagai berikut:
Collateral Eligibility is the cross collateral application where the collateral can be used as collateral for one or more than one type of market transactions. KPEI applies collateral eligibility for online and offline collateral in each market with the following provisions:
The following is the haircut value for online and offline collateral set by KPEI :
Specifically for stocks that undergo suspend or un-suspend, KPEI will make adjustments to the stock’s haircut value in accordance with the applicable procedures.
Perfect Collateral is a condition for offsetting the obligation to deliver shares and stock collateral if the Clearing Member and/or its clients have an obligation to deliver stocks equal to the shares that are available in the collateral account, so that the obligation to deliver securities is deemed to be fulfilled until the settlement date. With the fulfillment of the obligation to deliver stocks, then the margin or the exposure on the obligation is reduced.