In accordance with Indonesia Financial Services Authority Regulation No.26/POJK.04/2014, Clearing and Guarantee Corporation (LKP) shall ensure that Clearings Members (AK), before placing the exchange transaction order, must have sufficient collateral that are controlled by the LKP. To that end, KPEI sets limits on transaction value (trading limit) that can be used every day before AK conducts transactions on the Stock Exchange.
The trading limits set by KPEI are Pool Limit, Market Limit, and Position Limit, which can be described as follows:
- Pool Limit
Pool limit is a transaction limit value which can be used by AK. Every transaction order entering each market will be validated against pool limit value. When the pool limit value is insufficient, then the order is rejected.
- Market Limit
Market limit is a transaction limit value for AK set for every market based on AK’s free collateral
- Position Limit
Position limit is a transaction limit specifically set for Derivatives market. Position limit is sent only when AK receives limit restriction from KPEI. With this position limit, AK can only perform crossing transaction on unsettled positions.
Limit restriction is KPEI’s policy to limit transaction or collateral withdrawal by AK based on potential information on transaction settlement failure or other negative information. Limit restriction is aimed to avoid greater failure that can impact the market.
In calculating these trading limits, KPEI use risk management system called RAZOR. Trading limit issued by KPEI will be sent to the stock exchange trading system JATS Next-G which is sent to respective Clearing Member. In addition, the limit value can also be seen on the member interface system, which can be accessed directly by the Clearing Members through the web.