Impact in OTC Derivative Markets from CCP Rules
Bank Indonesia (BI) issued the long-awaited central counterparty (CCP) regulation for over the counter (OTC) derivative transactions. Through Bank Indonesia Regulation (PBI) No. 21/11/PBI/2019, BI provides a legal basis for financial institutions wishing to become CCPs for OTC derivative transactions in interest rates and exchange rates. Some derivative OTC transactions include swaps, cross-currency swaps, and hedging exporters.
PBI regulates the requirements that must be met by institutions wishing to become CCPs, particularly the fulfillment of Principles for Financial Market Infrastructures and mandatory obligations such as capital, governance, and risk management.