Bank Indonesia Circular Letter Number 10/37/DPM - Government Bond Reverse Repo Transactions with Bank Indonesia in Open Market Operations - Bank Sentral Republik Indonesia
Navigate Up
Sign In
October 01, 2020
Summary Bank Indonesia Laws

Regulation : Bank Indonesia Circular Letter Number 10/37/DPM - Government Bond Reverse Repo Transactions with Bank Indonesia in Open Market Operations
Effective date : November 13, 2008
Summary :
  1. Government Bond Reverse Repo (RR-SUN) Transaction is a SUN buying transaction by Bank to Bank Indonesia with an obligation to repurchase in a price and tenor as agreed.
  2. RR-SUN transactions may be conducted every day and in the purpose of monetary contraction under auction mechanism.
  3. The RR-SUN transaction mechanism is as follows.
    1. Conducted under sell and buyback principle.
    2. On the first leg Bank Indonesia will transfer ownership registration of traded SUN to Securities trading account of Bank.
    3. On the second leg Bank is required to sell back the SUN to Bank Indonesia.
    4. If Bank fails to sell back the SUN, the SUN failing to be sold back by Bank will be treated as an outright buying transaction by Bank.
  4. RR-SUN transaction tenor is 1 (one) day up to 1 (one) year which is stated in number of calendar days and will be counted since 1 (one) day after the transaction settlement date up to the maturity date.
  5. RR-SUN auction participants comprise :
    1. Bank, which bids for its own behalf; and/or
    2. Broker, which bids for Banks. Any RR-SUN auction participant has to be in the status of active of a BI-SSSS participant and not being imposed a sanction of temporary termination to participate in OMO activities.
  6. Reverse Repo Rate (RR-Rate) is an interest rate to be paid by Bank Indonesia on SUN buying transaction by Bank by Reverse Repo.
  7. RR-SUN auction plan will be announced by Bank Indonesia before the implementation of auction at the latest through the BI-SSSS System and/or LHBU System.
  8. Types, series, Haircut, and Price of SUN under transaction in the RR-SUN auction will be determined by Bank Indonesia.
  9. RR-SUN auction mechanism may be conducted under :
    1. Fixed rate tender method
      Bank Indonesia determines RR-Rate for each transaction term; or
    2. Variable rate tender method
      Banks bid RR-Rate for each quantity and transaction term bid, with a RR-Rate bid multiple of 0.01% (one per ten thousand).
  10. Quantity bidding by each Bank as Auction Participant (Bank or Broker) shall amount to no less than Rp1,000,000,000.00 (one billion rupiah) and the remainder with a multiple of Rp100,000,000.00 (one hundred million rupiah).
  11. RR-SUN auction settlement is conducted no later than 2 (two) business days after the auction date through the BI-SSSS, seamlessly interconnected with the BI-RTGS System.
  12. RR-SUN auction settlement is conducted by :
    1. transaction by transaction (gross to gross) if only 1 (one) SUN series per auction (specific reverse repo); or
    2. entire transaction (gross to net) if more than 1 (one) SUN series per auction (general reverse repo).
  13. RR-SUN auction results will be announced by Bank Indonesia immediately after the RR-SUN auction window time closes..
  14. Bank Indonesia may adjust the realization of RR-SUN auction result quantity to the indicative target or cancel the RR-SUN auction.
  15. If Bank Indonesia bids for more than 1 (one) series of SUN in 1 (one) RR-SUN auction (general reverse repo), Bank Indonesia may determine the allocation of series and nominal value of SUN won by Banks.
  16. In the event of any failure in second leg RR-SUN transaction and treated as an outright buying transaction,
    1. Bank will not receive RR-Rate from Bank Indonesia.
    2. SUN value will be calculated based on results of the multiplication of transaction quantity won by Bank and SUN Price on the second leg date.
    3. If the SUN Price in second leg is higher than the SUN Price in first leg, Bank will be charged at the amount of the difference of SUN value and Haircut value which has been received.
    4. If the second leg SUN Price is same with or lower than the first leg SUN Price, Bank will be charged at the amount of Haircut which has been received.
  17. In the event of any failure in RR-SUN transaction settlement bringing about a cancellation in RR-SUN transaction settlement, Bank is liable to OMO sanctions.
Tags:  

Survey

Is this article give you useful information?
Rate this article:
Comment:
Show Left Panel