- PT Kliring Penjaminan Efek Indonesia ("KPEI") has issued Circular No. SE-008/DIR/KPEI/1122 of 2022 on Risk Parameters and the Settlement Mechanism for Structured Warrants ("Circular") in order to facilitate the clearing mechanism, as well as guarantees for market transactions that involve structured warrants, as a part of KPEI’s authority to engage in risk control.
- Risk calculations for structured warrants are divided up into calculations for the secondary market through the regular market and cash market, and calculations for issuers of structured warrants. In terms of the regular market, calculations of initial margins and variation margins should be undertaken in line with provisions that address the margin for securities equities. Meanwhile, calculations for issuers of structured warrants should be based on a certain formula, as set out in this circular.
- Furthermore, it is also important to note that during settlements of any overdue structured warrants, KPEI will employ a rounding-up process and will therefore utilize numbers that are closest to the relevant transaction volumes. In addition, the settlement price is the price that should be used as a reference during the implementation of the rights of structured warrants, as calculated by KPEI based on the closing price of the underlying warrant structure through the regular market.
- The Circular has been in force since 1 November 2022.
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