Establishment of Central Counterparties for OTC Interest-Rate and Exchange-Rate Derivative Transactions

In an attempt to mitigate the risks of any failure relating to interest and exchange rate (Suku Bunga dan Nilai Tukar – “SBNT”) derivative transactions (“Derivative Transactions”),[1] Bank Indonesia (“BI”) has issued Regulation No. 21/11/PBI/2019 on the Organization of Central Counterparties for Over-the-Counter Interest-Rate and Exchange-Rate Derivative Transactions (“Regulation 11/2019”). This framework mandates for the establishment of Central Counterparties for SBNT (“CCP SBNT”) which are to act as agencies responsible for the operation of novation, as clearing organizations and as risk management in relation to Derivative Transactions.[2]