Indonesia: New "purpose of settlement" requirement for free of payment instructions in certain security types - revised II

13.08.2014

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.

Effective

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

    Example: :70E::SPRO//EXCH

    Alternatively,the customer can use field :94B: (Sequence B) instead of field :70E::

    Example: :94B::TRAD//EXCH/XIDX
  • 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:
Reason
Code		Settlement ReasonRequired supporting documentation
TRADSale and purchase of equities, asset backed securities and/or participation unit1.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 instruments1.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 Grants1.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).
KSEI/HERIInheritance/heritage1.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 inheritance statement or court decision with the name of the customer (as reflected in the account title).
KSEI/BARTBarter of securities1.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 barter document with the name of the customer (as reflected in the account title).
SUBSSecurities 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.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 SBL document with the name of the customer (as reflected in the account title).
KSEI/GIFTGift, gratification or charity1.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.Statement from the customer as giver or receiver with the name of the customer (as reflected in the account title).
KSEI/VERDCourt decision1.Court’s execution order.
COLO or COLISecurities collateral/pledge (COLO = Collateral out; COLI = Collateral in)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 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/MSOPSecurities distribution related to Management Stock Option (MSOP) and/or Employee Stock Options (ESOP)1.Report from the listed company/securities registrar.
ISSUDistribution of securities resulting from initial public offering1.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 OWNEBook-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/OTHRReserved for types other than those defined in this tablePlease 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.

Further information

For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.

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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.