A primary dealer is a bank and/or other party designated by Bank Indonesia that fulfils the specific criteria and is approved by Bank Indonesia. Primary dealer policy aims to support the implementation of monetary operations (MO) strategies, while developing deep, liquid and inclusive money and foreign exchange markets, thereby contributing to monetary and financial system stability.

Provisions concerning primary dealers are contained in Bank Indonesia Regulation (PBI) No. 9 of 2023, as an amendment to PBI No. 22/14/PBI/2020 concerning Monetary Operations and Board of Governors Regulation (PADG) No. 2 of 2024 concerning Primary Dealers.

Primary Dealer Criteria

The primary dealer criteria cover various aspects, including the contribution, capability, collaboration and reputation, assessed as follows:

1. General Criteria:
   1. Size, namely the size of the financial services provided by the primary dealer to the financial system and real sector,
      
   2. Interconnectedness, namely the interconnectedness between the primary dealer and financial system,
      
   3. Complexity, including substitutability, and
      
2. Specific Criteria:​
   
   1. Transactions, as measured by transactions with Bank Indonesia, transactions with the real sector and cross-border transactions,
   2. Interconnection, as measured by interconnection with Bank Indonesia, interconnection with the real sector and cross-border interconnection,
      
   3. Competence, as measured by fulfilling the competency requirements for human resources,
      
   4. Risk Management, as measured by market risk management, liquidity risk management and/or operational risk management, and
      
   5. Infrastructure, as measured by the readiness of ICT infrastructure, governance infrastructure in the money market and foreign exchange market, as well as cyber resilience and cybersecurity. 
      

Bank Indonesia may adjust the criteria, which will be notified via letter, the official BI website and/or other media.

Primary Dealer Activities

Primary dealers conduct the following activities:

1. Participate in open market operations (OMO) with primary dealer participants according to the predetermined schedule,
   
2. Access the facilities provided to primary dealers in the form of lending facilities for funds and/or securities implemented in phases,
   
3. Obtain information relating to their role as a primary dealer, and/or
   
4. Participate in Bank Indonesia activities. ​
   

Bank Indonesia may determine other primary dealer activities based on specific considerations, which will be notified via letter, the official BI website and/or other media. 

Primary Dealer Obligations

Primary dealers are obligated to:

1. Be active in open market operations (OMO),
2. Become a market-maker,
3. Submit reports, market analyses and other information as requested by Bank Indonesia,
4. Maintain the interests and reputation of Bank Indonesia, and
5. Comply with prevailing laws and regulations that may impact the effectiveness of the role as a primary dealer. 
   

​​The primary dealer obligation of remaining active in open market operations can be fulfilled by:

1. Submitting bids for OMO transactions with primary dealer participants. At the initial stage, primary dealers will be obligated to submit at least 1 (one) bid per day during an SRBI auction according to the schedule announced previously.
   
2. Fulfilling the minimum number of OMO transactions with primary dealer participants. At the initial stage, primary dealers will be obligated to meet a certain number of winning SRBI bids as follows:
   
   • KBMI 4 Primary Dealers: Minimum 3% wins of total SRBI issuances in 3 (three) months. 
     
   • Other KBMI Primary Dealers: Minimum 1% wins of total SRBI issuances in 3 (three) months
     

1. Formulating a strategy to increase money market transactions annually, submitted to Bank Indonesia in the form of a Work Plan Report containing the following:
   
   1. Plan to increase transaction volume in the SRBI secondary market,
   2. Work plan to increase repo transaction volume, and
   3. Work plan to increase counterparty line repo. ​
      
2. Submitting a daily two-sided bid and ask quotation as follows:
   
   1. Repo and SRBI price quotations, submitted each business day at 09.00 – 11.00 WIB and 13.00 – 14.00 WIB,
   2. Repo tenor quotations: overnight, 1 (one) week, and 1 (one) month,
   3. Maximum repo quotation spread: 5bps for overnight tenors, 10bps for 1 (one) week tenors, and 20bps for 1 (one) month tenors,
   4. Hittable repo quotations in line with internal regulation for each PD and market conduct principles of minimum Rp5 billion (five billion rupiah) for each tenor per day,
   5. SRBI secondary market price quotation: minimum of 1 (one) SRBI series held which is classified in the trading book,
   6. Maximum SRBI quotation spread is 20bps,
   7. Quotations are submitted via the Money Market Price Information Platform Provider, and
   8. Repo and SRBI price quotations in the secondary market are mandatory from 1^st July 2024. 
      

Bank Indonesia may evaluate the primary dealer obligations based on specific considerations. The primary dealer obligation of submitting reports, market analyses and other information is as follows:

Scope of Reports: ​

1. Reports and information on primary dealer transactions in the form of existing Integrated Commercial Bank ANTASENA Reports on money market and foreign exchange market transactions. This report will be taken into consideration when evaluating the primary dealer.
2. Reports and information on the latest developments in the domestic financial markets in the form of daily market reviews and outlook (encompassing the SBN and money markets, foreign exchange market, liquidity conditions and other issues), submitted via email (komunikasi_du@bi.go.id) and/or the communication channels stipulated by Bank Indonesia. The report must be submitted on the same day in question.
3. Reports requested by Bank Indonesia in the form of a work plan and annual report, which include monitoring the fulfilment of specific criteria as a primary dealer and the action plan based on the results of an evaluation. ​
   Work plan Format 
4. Other information as requested by Bank Indonesia. ​

Consultation and Licensing

Bank Indonesia can arrange consultations concerning the primary dealer regulations during certain periods. Banks can also submit requests for consultation to Bank Indonesia via softcopy email to the following address:

Requests for consultation will be accepted from 25^th April – 3^rd May 2024.

To be approved as a primary dealer, banks must apply for approval as a primary dealer to Bank Indonesia. Applications are submitted to Bank Indonesia along with the supporting documents in softcopy format via the licensing front office: cs_perizinan@bi.go.id​

Application submissions for approval as a primary dealer are limited to specific periods. During the initial stage, the licensing period for primary dealers is open from 24^th April – 3^rd May 2024. 

Applications must be accompanied by the following supporting documents:

1. Statement or proof of membership of a money market and foreign exchange market self-regulatory organisation (SRO) registered at Bank Indonesia, and​
   
2. Statement of no outstanding sanctions imposed by a competent authority. The format of the application letter and supporting documents is as follows:​​​​​​
   Primary Dealer Member of the Board of Governors Regulation Attachment​

Primary Dealer Supervision and Evaluation

Bank Indonesia will conduct periodic supervision and evaluations of primary dealers with respect to:

1. Fulfilling the primary dealer obligations on a quarterly basis or other period determined by Bank Indonesia, and
2. The performance of primary dealers on a semester basis in terms of fulfilling the general and specific criteria.

Bank Indonesia will conduct supervision and evaluations during the following periods:

1. Supervision and evaluations of obligation fulfilment 
   1. Period 1: January – March
   2. Period 2: April – June
   3. Period 3: July – September
   4. Period 4: October – December
      
   The first supervision and evaluation activities concerning the fulfilment of primary dealer obligations will be held in October 2024 for the data period from July – September 2024. 
   ​
2. Supervision and Evaluation of performance
   1. Period 1: January – June
   2. Period 2: July – December
The first supervision and evaluation activities concerning performance will be conducted in September 2024 for the data period from January – June 2024. ​​

Primary Dealer List​

A list of primary dealers approved by Bank Indonesia is accessible via the following link:

 ​ Primary Dealer List​  ​​​

Global Benchmark Reform​

1. Timeline
   In conjunction with other financial market authorities, Bank Indonesia has communicated the LIBOR transition to all domestic market players.  The timeline of the LIBOR transition is as follows:
    
2. LIBOR Discontinuation Preparedness Survey

   a.     Survey of Banking Sector

   Bank Indonesia has surveyed the banking sector to identify LIBOR use in the domestic financial markets.  The survey revealed LIBOR exposure in the banking industry as well as banking industry preparedness for the discontinuation of LIBOR.

   In total, 39 domestic banks actively transacting foreign currencies were surveyed, representing 86% of exposure to foreign currency loans, rupiah loans and foreign currency derivatives.  The salient results of the survey are as follows:

    

   b.     Survey of Non-Financial Corporations

   At the end of 2020, Bank Indonesia surveyed non-financial corporations with high foreign exchange exposure.  With respondents totalling 219 corporations, only 11% or 23 corporations were affected by LIBOR exposure.  Of the 23, most (70%) were yet to transition due to insufficient information.  Meanwhile, some of the other corporations had identified financial contracts with LIBOR exposure but were yet to transition.
3. CEO Letter

   Bank Indonesia has increased the preparedness of market players for the discontinuation of LIBOR by sending a CEO Letter to all banks and several corporations in June 2020.  Through the CEO Letter, Bank Indonesia reminded domestic banking industry and corporate sector leaders to undertake the following anticipatory measures:

   1. Identifying financial contracts using LIBOR
   2. Preparing contingency plans for the financial contracts using LIBOR through additional fallback clauses with relevant counterparties
   3. Actively restricting LIBOR use in new financial contracts
   4. Analysing the actions necessary in the business processes impacted as part of the risk mitigation plan
   5. Documenting governance of the LIBOR transition
4. National Working Group
   In line with FSB-OSSG recommendations and in anticipation of LIBOR discontinuation, Bank Indonesia has coordinated with other domestic financial market authorities, namely the Financial Services Authority (OJK) and Ministry of Finance, as well as engaged in dialogue with industry associations represented by the Indonesia Foreign Exchange Market Committee (IFEMC).
   Close coordination and cooperation between domestic financial market authorities represent an important strategic measure to safeguard the massive and measured anticipatory measures required towards LIBOR discontinuation.
   In November 2020, the coordination forum agreed to establish a National Working Group to jointly overcome the LIBOR transition challenges, covering legal, accounting, tax, risk management and infrastructure system aspects.