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Jakarta Post

'Derivative clearing houses needed to mitigate risks'

  • Marchio Irfan Gorbiano

    The Jakarta Post

Jakarta   /   Mon, October 7, 2019   /  03:29 pm
The Jakarta Post Image
The Bank Indonesia building on Jl. MH Thamrin in Central Jakarta.( )

Economists and bankers have warmly welcomed a new Bank Indonesia (BI) regulation that lays the groundwork for the establishment of derivatives clearing bodies, or central counterparties (CCPs), in the country, saying such institutions could mitigate transaction risks. Meanwhile, the central bank said the CCPs would be part of the infrastructure to deepen the financial market. A CCP is a clearing agency intended to bring regulatory oversight to over-the-counter (OTC) derivative transactions, which — because they were largely unregulated before the 2008 global financial crisis — are deemed one of the causes of the crisis. The establishment of CCPs was part of the Group of 20 leaders’ statement in their 2009 and 2001 summits. BI Regulation No. 21/2019, which will be effective starting June 2020, stipulates that a CCP needs to be established as a limited liabili...