New framework establishes SFA in Indonesia
12 February 2019 Jakarta
Image: Shutterstock
The Indonesian Financial Services Authority has issued a regulation, which provides a framework to establish a Securities Finance Agency (SFA) in order to boost transaction volumes and liquidity in the Indonesian stock market.
The regulation, Regulation 25/POJK.04/2018, entered into force on 5 December last year.
According to Elsie Hakim and Novario Asca Hutagalung of Indonesian law firm, Ali Budiardjo, Nugroho, Reksodiputro, the SFA will provide securities financing to brokerage firms that are currently hindered by limited internal resources and lack of access to funding from banks and other sources.
Additionally, the SFA is expected to provide an alternative source of financing to brokerage firms to fund margin trading, short selling and other types of transaction.
Upon securing approval from the Financial Services Authority, financing may also be provided for other types of securities transaction.
This includes public offerings on the primary market, repurchase agreements and securities lending activities.
The regulation, Regulation 25/POJK.04/2018, entered into force on 5 December last year.
According to Elsie Hakim and Novario Asca Hutagalung of Indonesian law firm, Ali Budiardjo, Nugroho, Reksodiputro, the SFA will provide securities financing to brokerage firms that are currently hindered by limited internal resources and lack of access to funding from banks and other sources.
Additionally, the SFA is expected to provide an alternative source of financing to brokerage firms to fund margin trading, short selling and other types of transaction.
Upon securing approval from the Financial Services Authority, financing may also be provided for other types of securities transaction.
This includes public offerings on the primary market, repurchase agreements and securities lending activities.
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