12 May 2014
FUTURES REGULATOR INTRODUCES NEW DERIVATIVES CONTRACTS

The Indonesian Commodities Futures Trading Supervisory Agency (“Bappebti”) recently issued Regulation No. 109/BAPPEBTI/PER/01/2014 regarding Derivative Contracts Traded on the Alternative Trading System (the “Regulation”).

With the issuance of the Regulation, Bappebti now allows futures exchanges in the country, though still subject to Bappebti’s further approval. At the same time it also introduces contracts for differences for three commodities/instruments, respectively stock indexes, foreign currencies, and commodities (the “Contracts”). The Regulation sets out requirements for the trading of these Contracts on the alternative trading system (“ATS”). The ATS is basically an over the counter trading system which is separately regulated under Bappebti Regulation No. 95/BAPPEBTI/PER/06/2012.

The Regulation also imposes on the futures exchanges (bursa berjangka) the obligation to ensure that Contracts traded by their members meet the following requirements:

a. There is a reliable price reference from other derivative markets which can be continually accessed;
b. There are at least two brokers that are interested in the Contract;
c. The Contract is traded under a set of specification standards; and
d. There is economic benefit in that the Contract can be used as a hedging instrument.

The Regulation revokes two previous Bappebti regulations, being: i. Regulation No. 72/BAPPEBTI/PER/09/2009 on Derivative Contracts Traded on the Alternative Trading System; and ii. Regulation No. 89/BAPPEBTI/PER/09/2011 on Types of Derivative Contracts that must be Reported to the Futures Exchange and Registered with the Futures Clearing House. (by: Hamud M. Balfas).