The rapid development of the banking sector has led to an equally rapid development of banking products offered to clients of banks. These products are quite often a lot more sophisticated and complex than the customers buying into them, particularly with respect to the understanding of the financial complexity.
Banks have begun offering more structure products as part of their product base. Bank Indonesia (BI) has determined that there is a necessity to regulate these products to ensure that greater levels of due care are taken with regard to risk management. Therefore, BI has issued Regulation No. 11/26/PBI/2009 to set out the applicable regulatory framework for structured products. The regulation will improve the quality and transparency of information that is available to the public thereby allowing the public to make better and more informed decisions about getting involved with structured products.
In essence, structured products are a combination of any non-derivative and derivate product or a combination of derivate products providing they comply with the provisions relating to criteria set out in Article 2.
Generally, the regulation simply sets out obligations for banks before engaging to offer the structured products to any of their clients. The obligations include, among others:
-
The implementation of certain types of risk management (Articles 8 - 14);
-
Classification of clients (Articles 15 and 16);
-
The implementation of information transparency for the public (Articles 17 - 20); and
-
A duty to report to BI (Articles 31 -33).
It is expected that with these obligations the clients would anticipate more and prevent great losses from the complexity of the structured products offered by banks. To guarantee the banks’ compliance with the provisions in this legal instrument, the regulation provides sanctions as stipulated under Chapter VII.
The regulation has been in force since 1 July 2009.
The rapid development of the banking sector has led to an equally rapid development of banking products offered to clients of banks. These products are quite often a lot more sophisticated and complex than the customers buying into them, particularly with respect to the understanding of the financial complexity.
Banks have begun offering more structure products as part of their product base. Bank Indonesia (BI) has determined that there is a necessity to regulate these products to ensure that greater levels of due care are taken with regard to risk management. Therefore, BI has issued Regulation No. 11/26/PBI/2009 to set out the applicable regulatory framework for structured products. The regulation will improve the quality and transparency of information that is available to the public thereby allowing the public to make better and more informed decisions about getting involved with structured products.
In essence, structured products are a combination of any non-derivative and derivate product or a combination of derivate products providing they comply with the provisions relating to criteria set out in Article 2.
Generally, the regulation simply sets out obligations for banks before engaging to offer the structured products to any of their clients. The obligations include, among others:
-
The implementation of certain types of risk management (Articles 8 - 14);
-
Classification of clients (Articles 15 and 16);
-
The implementation of information transparency for the public (Articles 17 - 20); and
-
A duty to report to BI (Articles 31 -33).
It is expected that with these obligations the clients would anticipate more and prevent great losses from the complexity of the structured products offered by banks. To guarantee the banks’ compliance with the provisions in this legal instrument, the regulation provides sanctions as stipulated under Chapter VII.
The regulation has been in force since 1 July 2009.
Ada Pertanyaan? Hubungi Kami 
Professional Solutions
University Solutions
Pro
My Workspace
Pro AI
Terfavorit
Allex QnA
Pro Compliance
