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Jakarta Post

Bank Indonesia appoints bourse-clearing house to handle government bond transactions

  • Grace D. Amianti

    The Jakarta Post

Jakarta   /   Mon, March 20, 2017   /   06:40 pm
Bank Indonesia appoints bourse-clearing house to handle government bond transactions The trading floor of the Indonesia Stock Exchange (IDX). (the jakarta post/Wienda Parwitasari)

Bank Indonesia (BI) has appointed the Indonesia Stock Market Clearing House (KPEI) as the domestic clearing operator for government bond transactions in the secondary market, both inside and outside the bourse.

BI and the KPEI signed on Monday a partnership agreement that aims to improve the data quality of government securities (SBN) transactions as most trading activities are conducted outside the Indonesia Stock Exchange (IDX) or over the counter.

BI deputy governor Sugeng said the bank supported the government’s plan to open alternative trading for sovereign bonds in a bid to increase activity and investor diversification.

“Aside from that, the appointment is part of BI’s support for the implementation of the electronic trading platform [ETP] for government securities transactions outside the bourse, which will help Indonesia’s debt paper market development,” he said in his speech.

With the KPEI acting as the clearinghouse, it is expected that the mechanism of price building in the secondary market for government bonds outside the bourse will become more transparent and fairer. The debt paper market is also expected to be more efficient and liquid.

(Read also: Govt feels deceived by JPMorgan)

More than Rp 1.89 quadrillion (US$142.3 billion) in government securities were issued as of mid-March, with total transaction value in the secondary market reaching Rp 7.52 quadrillion, or equal to 400 percent of total outstanding.

About 40 percent of government securities are owned by foreign investors, prompting fears of vulnerability in the event of massive capital outflows. (dan)