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Friday, March 26, 2010

Repo report to be mandatory: Transaction value and investor basis to be upsized

Friday, 26/03/2010 00:00 WIB

Repo report to be mandatory: Transaction value and investor basis to be upsized

JAKARTA: The Capital Market and Finance Institution Supervisory Agency (Bapepam-LK), capital market player, and bank plan to oblige the report of repurchase agreement for equity and bonds.

The policy will eliminate repo practice done over the counter (OTC). However, the scheme has yet to focus on special scheme of repo report.

Chief of Bapepam-LK Ahmad Fuad Rahmany said now the work group of formation of ge-neral master repurchase agreement (GMRA) has been established. The group has formulated the recommendation to make it reference for domestic repo transaction.

"Later it will be regulated for the report. As the form follows international standard, the transaction will be more organized," he said to press yesterday.

The frame here will become a special recommendation from Indonesia for the international standard practice stipulated in the master repurchase agreement of the International Swaps and Derivatives Association Inc (ISDA).

Based on the association sites, the international repo scheme becomes the general reference of transaction in the world. But the practice of each country need additional special attachment.

The attachment from Indonesia will help ease overseas investors to do domestic repo.

GMRA talk was once the last year agenda as it defined the legal aspect of equity repurchase agreement which was once blamed for being one of the stock market collapse in 2008.

However, the authority considered repo as the facility given to the customers as long as it is benefiting and the measured risk of the bourse has not banned.

President Director of PT HD Capital Tbk Antony Kristanto, one of the working group members of repo scheme formation, said the obligation should be regulated in the GMRA.

"The point is that it must be reported so as not to become like now with unclear obligation of the repo players and the trade system. If it is clear, it becomes observable and useful to every capital market or banking players."

Working group of repo scheme talk includes the Indonesai Securities Companies Association (APEI), self regulatory organization (SRO) and some associations like the State Bonds Trader Associtaion (Himadsun), and the Indonesian Custodian Bank Association (ABKI).

Antony said the company has formulated the rule of the game and code of conduct of the other repo action.

But he mentioned the realization and implementation will happen next year as it needs approval from international institution with repo transaction authority.

"With the existing permit or recognition from them, overseas investors that will have domestic investment could understand the rule of the game domestically, which is similar to the other country as there has been GMRA," said Antony.

Trade and bourse member regulation director of IDX Wan Wei Yiong admitted currently the bourse authority does not oblige the report of each repo transaction at capital market. The report is applicable for those with underlying asset of equity and bonds.

"Now most repo report is in corporate bonds and only government bonds. that is not much as there is no mandatory reporting."

Debt management director general Rahmat Waluyanto once said the government expected the GMRA could increase the transaction value that could also use SUN as the transaction basis.

That is one of the way to develop local investor basis by suitable and relevant instrument issuance.

"It is necessary to develop repo market (SUN). Now many repo lacks of optimum use. GMRA plans to live up the market due to the more various SUN instrument," he said.

Transactiona nd securities institution bureau chief of Bapepam-LK Nurhaida has just said one of the points to be regulated in the GMRA is the clause of default of the repo transaction.

Nurhaida said the clause of chain repo will not be included in the GMRA. But if it is attached, it will be included into other regulation.

Director of PT Kustodian Sentral Efek Indonesia (KSEI) Trisnadi Yulrisman said the GMRA here does not aim to have self anticipation of the implementation of single investor identification (SID) and straight through processing (STP) at the bourse next year. "It is different (from SID or STP) for the joint interest of the industry."

Trisndi said in the repo regulation, bourse member does not need reporting as the transaction has been united into the bourse and is automatically reported. But for the other repo players such as non bourse member securities and bank, that should be reported. "But that is not fixed yeast as it is still a plan." (Bisnis/iaa/faa)

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