On 21 November 2018, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK“) issued OJK Rule No. 21/POJK.04/2018 on Settlement Period of Stock Exchange Transactions (“New Rule“) which became effective on its issuance date.
The New Rule aims to shorten the settlement cycle of regular market in Indonesia Stock Exchange (“IDX“) to be on the second exchange day or T+2 after a securities transaction occurs as the previous T+3 settlement no longer represents global best practice. Under the T+2 settlement cycle, the seller must deliver the securities and the buyer must make payment on the second exchange day after the occurrence of the transaction. IDX officially implemented this starting from 26 November 2018.
As a result of this new settlement cycle, a time frame in certain other rules that relate to the settlement date will also be compressed, such as (among others) the time frame for a broker-dealer to conduct forced selling in the regular market if a customer of the broker-dealer has not yet fulfilled his obligations within certain period after the occurrence of his transaction.
This new settlement cycle is intended to reduce liquidity risks and increase operational efficiency in the Indonesian capital market.
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