Jumat, Oktober 27, 2023

OJK Introduces Eight Margin Requirements for NCCD Transactions Applicable to BUK

The Financial Services Authority (Otoritas Jasa Keuangan – "OJK") has decided to introduce a number of margin requirements for Non-Centrally Cleared Derivative ("NCCD") transactions of Conventional Commercial Banks (Bank Umum Konvensional – "BUK") via Central Counterparty ("CCP") institutions through the issuance of Circular No. 17/SEOJK.03/2023 ("Circular 17/2023"), which has been in force since 19 October 2023.
At its core, a total of eight margin requirements for the above-described NCCD transactions ("Requirements") have been introduced. Said Requirements are comprehensively outlined under the Appendix to Circular 17/2023 and encompass the following aspects, among others: 1) Scope of derivative transactions; 2) Scope of parties subject to the mandatory margin; 3) Minimum number and method for the calculation of initial margin and variation margin; 4) Assets that qualify for the Requirements; 5) Treatments for accepted margins.
In addition to the above matters, Circular 17/2023 also addresses four aspects that relate to the management of margins for BUK. Said margin management breaks down as follows: 1) Management of initial margin; 2) Management of variation margin; 3) Agreement between parties that engage in NCCD transactions; and 4) Administration of data by BUK.
It is also important to note that the above-mentioned initial and variation margin requirements will apply by 1 September of the year following the first CCP qualifying for operation in Indonesia. It should be noted that the variation margin requirements will apply to all BUK that engage in NCCD transactions, regardless of their total notional amounts, while the initial margin requirements will apply to BUK that have total aggregate average notional NCCD transaction amounts of Rp. 10 trillion for final positions in March, April and May of the ongoing year.

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The Financial Services Authority (Otoritas Jasa Keuangan – "OJK") has decided to introduce a number of margin requirements for Non-Centrally Cleared Derivative ("NCCD") transactions of Conventional Commercial Banks (Bank Umum Konvensional – "BUK") via Central Counterparty ("CCP") institutions through the issuance of Circular No. 17/SEOJK.03/2023 ("Circular 17/2023"), which has been in force since 19 October 2023.
At its core, a total of eight margin requirements for the above-described NCCD transactions ("Requirements") have been introduced. Said Requirements are comprehensively outlined under the Appendix to Circular 17/2023 and encompass the following aspects, among others: 1) Scope of derivative transactions; 2) Scope of parties subject to the mandatory margin; 3) Minimum number and method for the calculation of initial margin and variation margin; 4) Assets that qualify for the Requirements; 5) Treatments for accepted margins.
In addition to the above matters, Circular 17/2023 also addresses four aspects that relate to the management of margins for BUK. Said margin management breaks down as follows: 1) Management of initial margin; 2) Management of variation margin; 3) Agreement between parties that engage in NCCD transactions; and 4) Administration of data by BUK.
It is also important to note that the above-mentioned initial and variation margin requirements will apply by 1 September of the year following the first CCP qualifying for operation in Indonesia. It should be noted that the variation margin requirements will apply to all BUK that engage in NCCD transactions, regardless of their total notional amounts, while the initial margin requirements will apply to BUK that have total aggregate average notional NCCD transaction amounts of Rp. 10 trillion for final positions in March, April and May of the ongoing year.

......