Bank Indonesia Circular Letter No. 10/16/DPM - Procedures of the Issuance of Bank Indonesia Sharia Certificate through Auction - Bank Sentral Republik Indonesia
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September 25, 2020
Summary Bank Indonesia Laws

Regulation : Bank Indonesia Circular Letter No. 10/16/DPM dated March 31, 2008, concerning Procedures of the Issuance of Bank Indonesia Sharia Certificate through Auction
Effective date : March 31, 2008

Summary :

  1. SBIS Auction Mechanism
    1. Bank Indonesia shall announce SBIS auction plan no later than 1 (one) working day prior to an SBIS auction, including :
      1. BUS or UUS which may participate in SBIS auction (FDR > 80% and is not being under imposition of a sanction of temporary termination to participate in SBIS auction);
      2. SBIS tenor;
      3. Rate of return, with reference to discount rate resulting from the auction of Bank Indonesia Certificate (SBI) of the same maturity which is issued simultaneously with the issuance of the SBIS under the following provisions.
        • If the SBI auction applies a fixed rate tender method, the SBIS rights shall be stipulated the same as the discount rate resulting from the SBI auction.
        • If the SBI auction applies a variable rate tender method, the SBIS rights shall be stipulated the same as the weighted average of discount rate resulting from the SBI auction.
      4. Transaction date; and
      5. Settlement date.
    2. On the day of SBIS auction (Wednesday, 10.00 a.m. - 12.00 p.m., western Indonesia standard time), BUS, UUS, or Broker shall bid for SBIS quantity which will be bought to Bank Indonesia, c.q. DPM-BOpM, through the BI-SSSS.
    3. Bank Indonesia, c.q. DPM-BOpM, shall announce SBIS auction results after SBIS auction window time closes on the day of auction, individually to auction winners through the BI-SSSS and as a whole through the BI-SSSS and the LHBU System.
    4. Bank Indonesia shall determine the quantity of SBIS auction winner based on the number of bids for quantity received or based on calculation of quantity on proportional basis.
    5. Bank Indonesia, c.q. DPM-PTPM, shall settle SBIS auction results on the same working day with the day of SBIS auction (same day settlement) by :
      • debiting Demand Deposit Account of auction winner in Fund Settlement; and
      • crediting Securities Account of auction winner in Securities Settlement, respectively amounting to nominal value of won SBIS.
    6. If the BUS or UUS winning the auction does not hold an adequate balance in its Demand Deposit Account to cover the whole liabilities in the Fund Settlement as referred to in point 1.a up to the BI-RTGS System cut-off warning, the SBIS auction results won by the BUS or UUS shall be declared cancelled.
    7. Bank Indonesia may also cancel SBIS auction results, among other things, if the incoming bids are considered far beyond the normal liquidity estimation. Such cancellation shall be announced by Bank Indonesia after the SBIS auction window time closes, individually to auction winners through the BI-SSSS and as a whole through the BI-SSSS and the LHBU System.
  2. Sanctions
    1. For any cancellation of SBIS auction results due to an inadequacy of balance in the Demand Deposit Account the BUS or UUS shall be imposed sanctions in the form of written warning and financial penalty of 1‰ (one per thousand) of the nominal value of the cancelled SBIS or at a maximum amount of Rp1,000,000,000.00 (one billion rupiah) for each cancellation.
    2. If within a period of 6 (six) months a BUS or UUS receives written warning 3 (three) times, in addition to the written warning and financial penalty, the BUS or UUS shall also be imposed a temporary termination to participate in SBIS auction up to the auction of the following week and prohibition of proposition for Repo SBIS for 5 (five) consecutive working days.
    3. The counting of 3 (three) time written warning shall also count Repo SBIS of the BUS or UUS which is declared cancelled.
  3. Concluding Provisions
    By the enactment of this Circular Letter, Bank Indonesia Circular Letter Number 7/37/DPM dated August 8, 2005 concerning Procedures of Implementation and Settlement of Bank Indonesia Wadiah Certificate shall be revoked and declared no longer valid. Provisions in this Circular Letter shall come into force as of March 31, 2008.
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