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Indonesia to establish clearing house for derivatives in 2018
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Bank Indonesia (BI) expects to have a clearing and settlement house, known as a central counterparty (CCP), serving derivatives markets effectively operating in 2018 in Indonesia. (Kompas)
B
ank Indonesia (BI) is working on the creation of a clearing and settlement house, known as a central counterparty (CCP), for derivatives transactions and expects to have it effectively operating in 2018.
According to BI's head of department of financial market development, Nanang Hendarsah, a CCP will reduce the credit risk of the counterparty and the systemic risk of a transaction in the financial markets.
"To have a CCP in the derivatives market is important as we saw the transactions in 119 banks are limited and segmented. A CCP will minimize the limitations of credit because it will cover the entire credit risk. BI expects a CCP to be established in 2018," Nanang said in Jakarta on Thursday.
Indonesia, he said, should take India as a role model in developing a CCP. The transactions in India’s money markets, derivatives and government securities were reported to spike following the establishment of a CCP. "It's crucial to establish a CPP to deepen the market," Nanang said.
Currently, Indonesia only has CCPs operating in equity markets, namely PT Kliring dan Penjaminan Efek Indonesia (KPEI) and PT Kliring Berangkat Indonesia (KBI), as well as PT Indonesia Clearing House (ICH) in commodity and futures markets.
However, such services are absent in the money market, foreign exchange and derivatives markets. (ags)
