Bank Indonesia Circular Letter Number 10/23/DPM - Second Amendment to Bank Indonesia Circular Letter Number 7/1/DPM dated January 3, 2005, concerning Implementation of Fine Tune Operation Transactions in Open Market Operations - Bank Sentral Republik Indonesia
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September 29, 2020
Summary Bank Indonesia Laws

Regulation : Bank Indonesia Circular Letter Number 10/23/DPM - Second Amendment to Bank Indonesia Circular Letter Number 7/1/DPM dated January 3, 2005, concerning Implementation of Fine Tune Operation Transactions in Open Market Operations
Effective date : July 14, 2008

Summary :
To improve the implementation of monetary policy and valuation on underlying assets in Fine Tune Operation transactions, it is deemed necessary to amend Bank Indonesia Circular Letter Number 7/1/DPM dated January 3, 2005, concerning Implementation of Fine Tune Operation Transactions in Open Market Operations as amended by Bank Indonesia Circular Letter Number 9/5/DPM dated March 26, 2007. The main changes of provisions compared to previous provisions are as follows.

  1. Name of facility used by Bank Indonesia to announce FTO plans and transaction results has been adjusted, namely from PIPU to LHBU System.
  2. Requirements to become FTO auction participant have been adjusted, namely has to be in the status of active as BI-SSSS participant and not under imposition of sanction of suspension to participate in OMO activities.
  3. Provisions concerning the use of Securities (SUN and SBI) in FTE transactions have been adjusted, with main changes :
    • Bank Indonesia shall determine price and series of Securities tradable under FTE-Repo. The price and series of SBI tradable in FTE-Repo will be announced through the BI-SSSS.
    • The Securities price as referred to in letter a shall be determined taking into account of market price of each SUN series and weighted average discount rate on issuance and remaining days to maturity for each SBI series.
    • On the Repo transaction maturity date (second leg) the SUN under Repo shall still have remaining days to maturity at least of :
      1. 2 (two) business days for Bank Indonesia Certificate (SBI) and Treasury Bill (SPN); or
      2. 10 (ten) business days for Treasury Bond (ON) including Retail Treasury Bond (ORI) and Zero Coupon Bond (ZCB).
    • Repo Securities price shall be determined at the amount of Securities price deducted by Hair Cut. The Hair Cut rate of each type and series of Securities tradable in FTE will be announced through the BI-SSSS and/or LHBU System.
  4. Provision concerning the maximum Securities tradable under Repo in FTE transactions has been revoked (the previous provision limited at a maximum of only 10 series).
  5. Provision as elucidation to sanction of 1‰ (one per one thousand) of transaction nominal value on cancellation of Fine Tune Settlement has been added.
  6. Appendix 1 and Appendix 4 up to Appendix 7 have been adjusted, namely the examples of calculation of Securities price, Repo Securities price, and Fine Tune transaction settlement value, and an example of imposition of sanction of suspension to participate in OMO activities has been added.
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