1 Dormant Account Implementation

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1 From The Editor This time, Fokuss comes with an article concerning dormant account to discipline the Account Holders. Currently, 43% of Securities Sub Accounts registered in C-BEST are inactive or having no fund or securities. Accordingly, KSEI will start to discipline the Account Holders by having the inactive accounts deactivated. Certainly, there will be a number of procedures to be implemented by KSEI before freezing those accounts, such thing can be found in this article as well. Other writing talks about interesting information like comments from KSEI participants regarding the application of Pre-matching facility. How many benefit this module can offer to support the market players activities. There is also a review of seminar result carrying a theme of REPO, EBA and KSEI service products development. Not to mention, profile of one of KSEI s professionals, Mr. Syafruddin, managemenet series column, and many other activities noted by Fokuss Team. Enjoy your reading Editor Website KSEI: Dormant Account Implementation In order to avoid Sub Account misuse and to maintain C-BEST performance stability, KSEI will apply new rule namely Dormant Account. This step is taken to discipline account Holders in the opening of sub account. Currently, the journey of central custody services being supported by The Central Book- Entry Settlement System (C-BEST) has come into its 8th year after the establishment at mid-year of Now, the load of C-BEST gets heavier as there are many developments KSEI has performed in form of features modification, certain developments conducted upon requests from KSEI s service users or due to the increasing number of total assets managed by C-BEST for various instrument types. To be in line with those developments of KSEI s service products and features in C-BEST, KSEI tries to maintain the reliability as well as stability of C-BEST by monitoring such assets and features. Having observed the current condition, there is a fact that a number of Sub Securities Accounts opened by the Account Holders are in inactive status. This certainly will cause Sub Account misuse and burden C-BEST system in performing daily operations. At the same time, the growth of Securities Accounts in C-BEST will Content 1 Dormant Account Implementation Pre-matching Fast, Accurate & In-expensive REPO, EBA & KSEI Service Products Development Seminar Syafruddin: A Chance To Open Comprehension Performance Produktivity Cycle activities & StatistiCS 04 Edition Year 2008

2 Inactive Securities Sub Account 3 months No balance account - No movement Report, pre advice to close account - Dormant account - Start calculating daily penalty fee of dormant account Bloked for closure Stop calculating daily penalty fee of dormant account if the account have balance position or movement or the account is closed Fokuss Edition 04, 2008 surely increase significantly in the coming years. To reduce the load of C-BEST in the future and to discipline Account Holders related to the Sub Securities Account opening, KSEI shall implement dormant account (Inactive Sub Securities Account) accordingly. In KSEI, Inactive Sub Securities Account is defined as Sub Securities Account with no Securities and or fund balance, and it has no Securities and or fund movement within the period of six months as from the last date of withdrawal or recording of Securities and or fund balance. On every End of the Day process, C-BEST will run the job to check whether there is Securities Account with depository type of having no Securities and or fund position, as well as Securities and or fund movement. The data will later kept in C-BEST database, and they will be used to calculate the duration of Securities Account in such condition. Afterward, one month or several weeks before having an account declared as inactive Sub Securities Account, C-BEST will deliver pre-advice report containing request to Account Holder to activate or close such account. The purpose is to have the Account Holder prepare itself of whether to activate or close its Securities Account. C-BEST will automatically impose daily penalty fee of dormant account, that is one day following such account declared as inactive Sub Securities Account. Penalty fee of dormant account will be calculated proportionally everyday and claimed monthly together with KSEI invoice. One day after such account declared as inactive Sub Securities Account, C-BEST will deliver report containing the following information: Such Sub Securities Account is declared as Inactive Sub Securities Account. Calculation of daily penalty fee of dormant account. Another request to Account Holder to close the inactive Sub Securities Account or reactivate it by depositing Securities or fund position. Should there be no closing or reactivation of Inactive Sub Securities Account within the next three months, KSEI will accordingly perform automatic blocking upon such Sub Securities Account. Then, after being declared as Inactive Sub Securities Account, sometime between the 6th and 9th month, such Sub Securities Account can be directly reactivated by the Account Holder by depositing Securities or fund position into such account. The system will later automatically stop the calculation of daily penalty fee of dormant account. C-BEST will perform automatic blocking for the accounts who stay dormant for 9 months with blocking reason: blocked for closure. Account Holder will receive notification report concerning blocking of the Sub Securities Account. After the 9th month, Account Holder has to send request letter to KSEI in order to open the blocking or close the inactive Sub Securities Account. Inactive Sub Securities Account that has been free from the blocking cannot automatically become Active Securities Account. The inactive Sub Securities Account that has been unblocked can be directly reactivated by the Account Holder by depositing Securities or fund position into such account. Securities or fund position depositing into inactive Sub Securities Account and the closing of inactive Sub Securities Account will discontinue the calculation of duration of such inactive Sub Securities Account as well as daily penalty fee of dormant account. However, implementation of dormant account will be applied after KSEI obtain the approval from Bapepam & LK for its draft of rules. In the meantime, the draft of KSEI s rules is still in the Rule Making Rule (RMR) process. [ Astanti P. Mulyani ] Penerbit: PT Kustodian Sentral Efek Indonesia (KSEI) Penasihat: Direksi KSEI Dewan Redaksi: Zylvia Thirda, Dharma Setyadi, Susiyanti, Astanti P. Mulyani, Novian Harry Wibowo, Rachmat Irfan Penanggung Jawab: Bagian Komunikasi Perusahaan KSEI Alamat Redaksi: Gedung Bursa Efek Indonesia, Tower I Lt. 5, Jl. Jend. Sudirman Kav 52-53, Jakarta 12190, Telp , Fax Sirkulasi: Bagian Komunikasi Perusahaan KSEI

3 Pre-matching Fast, Accurate & In-expensive KSEI s Account Holders, who have got benefit from Pre-matching module, encourage other market players to start using this facility. By automation, instruction of Over The Counter transaction becomes faster, more accurate and in-expensive. Afdhal Aliasar. Require transaction counterpart N ow, a number of KSEI s Account Holders feel more comfortable in conducting Over The Counter (OTC) transaction through Pre-matching module. Since last April, KSEI has launched this new facility to help market players transact easier so it can improve the transaction settlement process. With this facility, KSEI s Account Holders can perform pre-matching upon instruction made by himself or upon instruction status made by the counterpart. Before this facility available in C-BEST, matching process was conducted manually. To avoid settlement discrepancy, respective parties (seller and buyer) perform the matching process by phone. Total transaction gets increased along with time, and manual process is later considered inefficient accordingly. Imagine how many calls have to be made in one day. While there is time when hundreds or even thousands of transactions happen per day, said Afdhal Aliasar, the Assistant Vice President Settlement & Transaction Processing-Securities & Funds Service Operations Markets & Banking of Citibank. Transaction settlement activities used to be performed by market players as described above started to be inefficient and involved a lot of manual communication activities. It certainly could slow down the settlement process, not to mention if the OTC transactions were going to use exchange transaction settlement. Many market players, either Exchange Members (EM) or Custodian Bank (CB), tend to make the OTC instruction in C-BEST at the last minutes of settlement date, especially OTC transactions that involved fund like DVP and RVP. Such condition that later encouraged KSEI to provide Prematching facility. And Citibank is one of the service users that has got the benefit from this module. According to Afdhal, his company performs 1,000 transaction per day on average. As of July, Citibank has actively used Pre-matching module. Now we use it everyday, we have schedule to upload transaction data to C-BEST system, he uttered. With this facility, pre-matching process gets faster, data accuracy gets better as well, and it can reduce human error. We can input 300 transactions simultaneously and they can be confirmed due to supporting application so-called ORCHiD (Online Research and Centralized Historical Data) for data reporting of prematching, he mentioned. Input data in Prematching facility will be released in form of report by ORCHiD module. KSEI currently provides the reporting on every 30 minutes. Afdhal hopes that the reporting velocity can be improved or even made on real-time basis. The professional who got chance to have career in public bank also said that he always tries to convey information to KSEI should there be necessary improvement for this reliable module. He mentioned an example of upload velocity that needed to be improved. If we input 500 transactions simultaneously for example, the process got a little bit longer. KSEI has to be able to improve the system velocity gradually, he said explicitly. However, Afdhal admitted that he s satisfied with the Pre-matching service though it still needs im- Fokuss Edition 04, 2008

4 4Fokuss Edition 04, 2008 provement, such as the appearance. It already helps our daily operation anyway. What interesting is KSEI always provides good respond to any input given by the participants. Besides, KSEI commits to always develop its services. And the most important thing is, to all of our clients, this facility makes the Pre-matching process faster, he added. One more thing, Afdhal expects that other participants, either Custodian Bank or Exchange Member, can start using the Pre-matching module together. Automation needs counterpart. We ask several large brokers who act as the counterparts to use this Pre-matching facility. As we cannot be ready alone. Currently, KSEI provides flexibility in using the Pre-matching. Transaction can still be matching in C- BEST although it applies clearing-settlement module. However, a number of brokers are reluctant to insert Prematching in their system before they make manual confirmation by phone, Afdhal explained. Similar statement comes from Dwi Marajuni Hardjojuwono of PT Wanteg Securindo. He hopes that, to avoid input error, all Exchange Members can participate in using Prematching to make the transactions faster and more effective. Dwi also mentioned that this module can avoid OTC fee incurred due to input error, and reduce operational cost (telephone) for confirmation. From his past experience, the application of Pre-matching facility is already comfortable as it requires no modification at all. The appearance, inquiry, and others are flexible as well. With this facility, prematching process gets faster, data accuracy gets better as well, and it can reduce human error. REPO, EBA & KSEI Service Products Development Seminar As a form of appreciation upon existing co-operation, KSEI organized REPO, EBA and KSEI service products development seminar for Account Holders and Registrars. On July 29, 2008, KSEI, once again, organized a seminar at The Ritz Carlton Hotel - Pacific Place, Jakarta for Account Holders (Securities Companies & Custodian Bank) and Registrars. Carrying a theme of REPO, EBA and KSEI service products development, this seminar was attended by 147 representations of Account Holders and Registrars. KSEI invited source person as well as practitioner in the field of Assets Backed Securities, those are: Director of PT Sarana Multigriya Finansial (Persero), Paulus Nurwadono, and in the field of Repurchase Agreement (REPO), Head of Retail Distribution of PT Danareksa Sekuritas, Sujadi. Director of KSEI, Trisnadi Yulrisman, guided the seminar as the moderator. According to Risbadi Purbowo, Director of KSEI, at the opening, the aim of this seminar was to provide Account Holders and Registrars with knowledge of capital market, and to strengthen the relationship between KSEI and its service users. Topic I: Collective Investment Contract (KIK) Assets Backed Securities (EBA) Paulus Nurwadono explaned that KIK EBA is a capital market instrument that has been regulated through Bapepam regulation number IX K.1 regarding Collective Investment Contract Assets Backed Securities guidance and has been inserted into INPRES number 6 tahun Initially, KIK EBA was implemented to provide solution for infrastructure, property and banking sectors in finding alternatives of longterm financing source. KIK EBA is defined as Securities, portfolio of which contains of financial assets in form of receivables arised from commercial papers, credit card bills, future receivables, loan granting including house or apartment loan, and debt securities guaranteed by the government. Besides, it is defined as credit enhancement/cash flow facility as well as equal financial assets and other financial assets that relate to such financial assets. KIK EBA differs from KIK Mutual Funds for KIK EBA has certain conditions as follows: 1. Requires process to form EBA. 2. Underlying asset is in form of financial assets (KPR receivables) and unchangeable. 3. Role of Investment Manager and Custodian Bank is in limited management. 4. Traded on the exchange. 5. Periodic interest payment and principal redemption (KPR Amortization). 6. Has prepayment risk. KIK EBA consists of Senior and Junior Classes. Senior Class is Securities offered to investor and listed on the exchange, and registered in rating agency with AAA rating target (Securities with higher level in liabilities redemption). While Junior Class is Securities to

5 be taken by the organizer and global coordinator, in this case are PT Bank Tabungan Negara (Persero) Tbk and PT Sarana Multi Finansial (Persero), and it is at the lowest level in liabilities redemption. Parties that involve in KIK EBA are: (1). Originator: original creditor of financial assets (KPR). (2). Investament Manager: responsible for monitoring cashflow acceptance from financial assets conducted by Service Provider, collecting supporting loan, and supervising payment made by Custodian Bank. regulation number VIII.G.13 regarding Accounting Treatment of Repurchase Agreement (REPO) by applying Master Repurchase Agreement (MRA). Currently, there are 3 (three) types of REPO, those are Collateralized Facility Agreement (CFA)/ Pledge, in which there are guarantor and guarantee and the transaction is performed off the market (OTC); Repo Sell-Buy Back (Classic Repo) is a common REPO, there are ownership movement and crossing naldy Akhyar, and Research & Development Department Head Research & Business Development Division of KSEI, Dian Kurniasarie, delivered information concerning KSEI Service Products Development, they are: C-BEST new look, Corporate Action calender in KSEI website, Pre-Matching Over The Counter Transaction, and upload function in Bond Management. Information of on-going developments were also delivered, such as: REPO, Assets Backed Securities module, Blocking Balance facility, Investor Area, Real Time Interface as well as SWIFT. (3). Custodian Bank: safekeep and record EBA owned by investor, perform collection result management, conduct distribution and payment of collection result to parties in securitization transaction, deliver report to Trust Agent regarding all custodian activities, perform recording upon ownership movement of EBA, protect and act for investor s interest in and out of the court. (4). Servicer: responsible for collection upon payment of KPR installment from bond issuer, loan workout/foreclosure process, fund movement to Paying Agent, bookeeping, reporting to specified parties at the determined period. (5). Securitization Administer: perform proper test to originator and prepare the securitization process, among others are by forming Selection Criteria and selecting prospective KPR and securitization, prepare cashflow analysis and financial modelling upon transaction, settlement and listing on the exchange. Topic II: Repurchase Agreement According to Sujadi, REPO is a transaction activity of Securities selling with a promise of repurchasing it within a specified time and price. It is an agreement between two parties, in which first party sells securities to second party at specific price with a commitment to repurchase such securities in the future at a different specific price. Parties who involve in REPO transaction are the party who owns the goods and needs fund, the party who owns funds, and the client party. This product is under Bapepam transaction at the exchange so it has final tax; and Clean Price Repo (with simple interest) is a simpler REPO where buy and sell happen with certain interest as previously agreed. For investor, REPO is an alternative to perform transaction when the market is sluggish. For the buyer, REPO provides benefits like safer investment as it has guarantee, flexible time limit, high liquidity, and competitive return. Selling party also makes REPO as financing alternative. Existing REPO risks are loan and market risks. For loan risk, player do not need to worry as there is 150% guarantee against the total fund. While market risk happens when the market is declining. Topic III: P KSEI Service Products Development Afterwards, Central Depository Services Division Head of KSEI, Gusri- The seminar was closed with informal meeting and lunch. Hopefully, KSEI can arrange similar program next year with different topics. For investor, REPO is an alternative to perform transaction when the market is sluggish. [ Nina Rizalina ] Fokuss Edition 04, 2008

6 Syafruddin A Chance To Open Comprehension This simple guy admitted to have a chance to broaden his comprehension by taking new task, supervising Research and Business Development Division. He puts finalization of a number of promising product & service developments as the short-term target. Fokuss Edition 04, 2008 I t can be said that the professional who familiarly called as Alec by his colleagues is a loyal figure. Having graduated from the Faculty of Informatics Techniques of Institut Teknologi Bandung (ITB) in 1996, the guy whose original name is Syafruddin has career in KSEI and stays there till now. According to his background, he worked in Information Technology Division until he was finally assigned to lead the Information System Development Division in 2005 up to last July. Now, he is responsible for leading the Research and Business Development Division (PPU). To Alec, the challenge in the division he currently leads is expertise or profession transition, from information technology side into business aspect. This father of two daughters also mentioned that the challenge will be greater as the scope of work gets broader and it requires a lot of interactions with many parties. On the other side, this new assignment, according to him, provides a chance to I just try to do my best and let other people value the result open a broader comprehension. In short-term, aside from the division organization development, his working program is aimed at finalization of KSEI s new products and services, such as pre-matching facility of OTC settlement, Investor Area, and supporting facility of new Securities type depository and settlement like KIK-EBA and Options. Meanwhile, long and mediumterm program are directed in line with KSEI s vision as the central depository for all capital market instruments and the implementation of mutual program with the SROs and Bapepam concerning Straight Through Processing in Indonesia capital market. Certain initiatives of mediumterm program among others are development of Repurchase Agreement (REPO) facility and Securities Lending and Borrowing (SLB) co-operated with PT Kliring Penjaminan Efek Indonesia (KPEI), concept development of Single ID investor, study of payment system integrated directly with BI-RTGS as well as data communication infrastructure through SWIFT network and interface facility with participant backoffice system. In long-term, the preparation of this infrastructure is expected to support efficiency discourse of business process in Indonesia capital market with STP approach, he explained. When being asked what his philosophy in his career, Alec mentioned that he has no spesific philosophy. The most important thing is I can be professional and maintain the integrity, so far I feel I have enough. It doesn t bother me whether I am hard worker or smart worker. I just try to do my best and let other people value the result, said the guy who likes movie, squash and sauna as his hobbies. And according to him, he holds out in KSEI as he finds there are many things to be learnt. With all the joy and sorrow, he is proud of being part of KSEI team since the very beginning and feels lucky to be able to track down the story of successful accomplishments KSEI has achieved. In the future, he added, there are targets KSEI intends to achieve and he hopes he still can give his support and be part of those achievements. Alec said that he has a dream of establishing an Information Technology (IT) company. However, though his intention of becoming an enterpreneur still exists, he no longer push himself too hard to establish an IT company. What he eagerly want to realize now is to improve himself by taking formal education or going back to school again, which he has started at Magister Management of University of Indonesia last year. Success to Alec..

7 M a n a j e m e n S e r i e s Performance Produktivity Cycle Just like a product, labour productivity also experiences a cycle, beginning from introductory phase, development phase, up to declining phase. I n fact, labour productivity has a cycle. As happen in a product, we acknowledge introductory phase, development phase, a phase of being a dairy cattle or profit-making, and declining phase. Likewise, performance productivity also experiences similar phases too. Only the factors involved in it, which are greater and more complex, that differ them. It is natural that things involving human and or other parties always become more complex as they closely correlate to conflict of interests or ego. Work productivity cycle can be divided into several phases, they are new spirit phase, progress and development phases, top achievement phase, and declining achievement phase. New spirit phase usually happens to a newly established teamwork or organization, in which each member of the team tries to show his idealism to such teamwork. Frictions are commonly revealed during the adaptation among the team members until they finally find a suitable format for the team. However, clear job description will help minimizing such frictions. Enthusiasm for idealism and competence proven will clearly seen among the members of the team. The will and the ability to co-operate are really dominant in every team activity as well. The role of team leader will be mostly required in vision directing and objective accomplishing of a teamwork that goes through this phase. Progress and development phases are the following step a teamwork has to bear after completing the previous phase. The teamwork has found a proper format and started to accomplish the task as well as the obligation orderly and consistently. A sense of strong co-operation is clearly seen in this phase. Frictions among members of the team starts declining significantly or even diminishing. The role of team leader gets very much easy and he mostly functions as a supervisor instead of a leader. Top achievement phase is the highest phase in a teamwork s performance. In this phase, the teamwork has finally produced a creation which is generated from good co-operation among members of the team. Actually, it is a proof of adulthood and maturity of a team. It can be simply said that this phase is the highest productivity phase a teamwork can ever grant to the organization. Declining achievement phase is the most critical phase that should be avoided in a teamwork s performance. The causes can be varied, but enduring boredom is the most common reason. In this phase, productivity deterioration gets started, beginning from achievement deterioration, creation reduction up to weakening work enthusiasm. Mostly, this phase occurs without being noticed by the person, the teamwork or individuals in such teamwork. However, it can be easily detected. Once a teamwork starts to no longer show new thing or fresh idea in its job, starts to show dissatisfaction and boredom, it is almost definitely positive that such teamwork is in a declining phase. Certainly, it needs to be observed by the team leader superior or supervisor, to have the team go back to the right way or planned objective. The following are recommended things to bring the declining phase back into the development phase or top achievement phase: [1] Re-motivating: to motivate again either jointly in a team or individually about the intended result of the job and the impact of such intended result. Make them realize that the teamwork is not an inferior team. In fact, it still has a lot of work potentials to produce things better than the achieved ones. Trying to look at the world outside the current work environment is one of the re-motivating ways to show the team that there are many things to be done within the work environment the same way they are implemented in other work environment. [2] Re-educating: to adopt new knowledge in order to improve the work capability of a team. The real objective is knowledge update upon development of technology and competence that can be produced or applied either directly or indirectly by a team in the teamwork. [3] Re-evaluating: to evaluate the needs of the team as well as individuals in it concerning things required in the work process and maximum work achievement. Acknowledge barrier and potential, then minimize the barrier and increase the potential. Put the barrier as a challenge in achieving result, and potential as tremendous main assets. 4. Re-visioning: an effort to revitalize the perspective and objective of the organization to the teamwork. Make them aware of the great result of the entire organization intends to be achieved by all teamworks of the organization. [ Rachmat Irfan ] Fokuss Edisi Edition 04, 04,

8 activities Mid-Year Press Conference The 31st Anniversary of Indonesia Capital Market To commemorate the 31st Anniversary of Indonesia Capital Market of August 10, 2008, Bapepam-LK together with the SROs (BEI, KPEI and KSEI) convened Mid_year Press Conference on August 11, The event, which was convened at BEI Gallery 1st floor, was opened by the Chairman of Bapepam-LK, Ahmad Fuad Rahmany, conveying information of Indonesia Capital Market performance during the 1st semester of 2008 and developments of financial services industry. Afterwards, report of performance and role of SROs in capital market developments were presented consecutively by the respective President Director of the SROs. Socialization of OTC Pre-Matching Facility To provide excellent service to its Account Holder, KSEI convened a training (hands on) concerning Pre- Matching facility for Over The Counter (OTC) transaction on June 30 July 4, 2008 at KSEI. This facility enables Account Holder to perform pre-matching upon instruction made by himself or upon instruction status made by the counterpart in conducting Securities movement with fund (Delivery Versus Payment) and without fund (Delivery Free of Payment) SROs Team Building In order to strengthen the good relationship among the SROs, BEI, KPEI and KSEI jointly arranged Team Building activity for Commissioners, Directors and employees on July 25-27, 2008 in Bali. The Team Building, carrying a theme of Jammin Together, was held at Kebun Raya Bedugul, Bali. Similar to SROs Team Building last year, the event was enlivened by performance competition among the SROs and live band, a collaboration among BEI, KPEI and KSEI employees. Performance of Shanty and Ira Swara, as the singers, and Sophie Navita and Denny-P Project, as the MCs, were also revealed as the main program. May the togetherness among the SROs employees gets closer. 8Fokuss Edition 04, 2008 Total Distribution of Corporate Action Periode of Januari - Juli 2008 Dana Jan - Juli 2008 Rp (triliun) USD (juta) statistics Over The Counter Settlement Frequency Periode of Januari - Juli 2008 Equity (Dividen dan Exercise) 22,50 40,16 Debt (Bunga dan Pokok) 47,31 112,71 Total Dana 69,81 152,87 Efek (Jumlah/Unit Efek) Saham Waran HMETD Total Asset Recorded In C-BEST Periode of Januari - Juli 2008 (In Trilion Rupiah) Total Sub Securities Account Recorded In C-BEST Periode of Januari - Juli 2008