Indonesia: New "purpose of settlement" requirement for domestic free of payment instructions in certain security types - revised II
Note: This Announcement, first published on 17 June 2014, was revised on 18 July 2014 to clarify instruction format details and the destination for the submission of supporting documents and is now further updated to clarify applicability and content.
21 July 2014
the Indonesia Central Securities Depository (PT Kustodian Sentral Efek Indonesia - KSEI) will implement new requirements for domestic free of payment (FOP) instructions related to equities and corporate debt instruments, whereby the investor will have to indicate the purpose of the settlement.
Impact on instructions
Customers of Clearstream Banking1 will be required to indicate the purpose of the domestic FOP instruction in field :70E::SPRO// in SWIFT (Settlement Processing Narrative field in CreationOnline) as follows:
- If the domestic FOP instruction is related to an on-exchange transaction (that is, if the transaction involves a local broker): EXCH
Alternatively,the customer can use field :94B: (Sequence B) instead of field :70E::
- If the domestic FOP instruction is related to an off-exchange transaction: OTCO/reason code
Example: :70E::SPRO//OTCO/reason code
In the case of off-exchange transactions, the customer must provide the relevant reason code and, in addition, submit supporting documentation as indicated in the following table:
|Settlement Reason||Required supporting documentation|
|TRAD||Sale and purchase of equities, asset backed securities and/or participation unit||1.||Settlement instruction from customer (customers do not need to submit this as this is already provided for by Clearstream Banking to the depository); and|
|2.||Copy of sale-purchase agreement from the customer.|
|Sale and purchase of fixed income instruments||1.||Settlement instruction from customer (customers do not need to submit this as this is already provided for by Clearstream Banking to the depository); and|
|2.||Written confirmation on securities sales and/or purchase from the transacting party (customer).|
|KSEI/GRAN||Grants||1.||Settlement instruction from customer (customers do not need to submit this as this is already provided for by Clearstream Banking to the depository); and|
|2.||Copy of grants document with the name of the customer (as reflected in the account title).|
|2.||Copy of inheritance statement or court decision with the name of the customer (as reflected in the account title).|
|KSEI/BART||Barter of securities||1.|
|2.||Copy of barter document with the name of the customer (as reflected in the account title).|
|SUBS||Securities movement related to subscription or redemption of mutual fund’s participation unit traded in the stock exchange (Exchange Traded Fund or ETF)||1.||Instruction from participant’s dealers.|
|SECB or SECL||Securities borrowing and lending (SBL)||1.|
|2.||Copy of SBL document with the name of the customer (as reflected in the account title).|
|KSEI/GIFT||Gift, gratification or charity||1.|
|2.||Statement from the customer as giver or receiver with the name of the customer (as reflected in the account title).|
|KSEI/VERD||Court decision||1.||Court’s execution order.|
|COLO or COLI||Securities collateral/pledge (COLO = Collateral out; COLI = Collateral in)||1.|
|2.||Copy of pledge agreement or notarised fiduciary agreement or collateral agreement or fiduciary certificate with the name of the customer (as reflected in the account title).|
|KSEI/MSOP||Securities distribution related to Management Stock Option (MSOP) and/or Employee Stock Options (ESOP)||1.||Report from the listed company/securities registrar.|
|ISSU||Distribution of securities resulting from initial public offering||1.||Securities allotment document indicating the name of the customer; and|
|2.||Distribution instruction from the selling agent/underwriter with subscription reference number from the customer.|
|OWNI or OWNE||Book-entry of securities between securities safekeeping account belonging to the same beneficial owner (NCBO) (OWNI = Internal party; OWNE = External party)||1.||Settlement instruction from the customer (customers do not need to submit this as this is already provided for by Clearstream Banking to the depository).|
|KSEI/OTHR||Reserved for types other than those defined in this table||Please contact Clearstream Banking Client Services to determine the required supporting documentation.|
It is recommended that customers submit the supporting documents via email to SettlementSingapore@clearstream.com2 at the same time as their FOP instruction, before the FOP deadline. FOP instructions without the required supporting documents will not be able to settle.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
2. This email address is solely for the purpose of submitting the relevant supporting documents in relation to FOP instructions in Indonesia. All communications received at this email address on other matters will not be replied to or forwarded; customers should address such other matters to Clearstream Banking Client Services.