- The Financial Services Authority (Otoritas Jasa Keuangan - "OJK") is currently preparing a Draft Regulation on the Development and Strengthening of Investment Management ("Draft Regulation"), which features six chapters that cover 18 articles. If ultimately enforced, the Draft Regulation will repeal and replace various currently applicable prohibitions that apply to mutual fund investment managers, as featured under several existing OJK frameworks.
- Broadly speaking, the Draft Regulation states that any loans that are received through loan recipient mutual funds are required to meet the following requirements: 1) Must be for repurchase and repayment transactions; 2) All loans should take the form of funds; 3) Must be short-term loans with maximum loan periods of one month; 3) The maximum loan amount is set at 10% of the value of the relevant mutual fund portfolio. In this regard, the aforesaid mutual funds are prohibited from receiving any loans from parties that are affiliated with relevant investment managers.
- Meanwhile, the Draft Bill states that any loans that are provided by mutual funds must take the form of securities through the Clearing and Guarantee Institution, while any such loaned securities must meet the following requirements: 1) The amount of any loaned securities must not exceed more than 30% of the relevant net assets at any given time; 2) Must be listed through a stock exchange in Indonesia; 3) May be reacquired by the relevant mutual funds at any given time; 4) The mutual funds should receive collateral in the form of funds or securities.
- In addition to the above requirements, the Draft Bill also obliges all mutual funds that invest in foreign mutual fund securities to fulfill a minimum of 15% of the net asset values of the relevant mutual funds, while each foreign mutual fund must not exceed 10% of the net asset value. In this regard, the Draft Bill also mandates that investments in foreign mutual fund securities should be carried out in countries that have become members of the International Organization of Securities Commissions (IOSCO) and that have ratified the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (IOSCO MMOU).
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