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Jakarta Post

BI to toughen rules on derivative products

  • The Jakarta Post

Jakarta   /   Mon, February 2 2009   /  04:05 pm

With banks already exposed to the high risk posed by derivative transactions, the central banks have decided to tighten regulations on derivative and other structured products. The new regulations will further strengthen a ruling made last month by the bank to ban derivative transactions related to speculation deals. More regulations are expected to follow. "For products related with structure and derivatives, there will be qualifications and conditions for banks to adhere to if they wish to become eligible to carry engage in these business transactions," BI deputy governor Muliaman D. Hadad said last Friday. Also, he added, these products would only be sold to consumers with a strong understanding of their purpose. "We call these clients sophisticated customers," Muliaman said. The high exposure of Indonesia's banks to derivative...