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Streamlining STP Development in Indonesia's Securities Market

This roadmap outlines Straight Through Processing (STP) concepts for Indonesian Central Securities Depository and Central Counterparty. Learn about enhancing business processes, risk management, and market infrastructure to boost efficiency and minimize errors.

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Streamlining STP Development in Indonesia's Securities Market

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  1. Straight Through Processing (STP) Development Concept & Roadmap Indonesian Central Securities Depository (KSEI) Indonesian Central Counterparty (KPEI)

  2. STP Background 1 Business Process Identification 2 KSEI & KPEI Initiatives 3 AGENDA

  3. Challenges : • Funding Issues • Funding cost (turn around transaction) •  Inefficiency Various Products: Equity, Fixed Income, Derivatives Socialization/ Education • Risk Issues : • Operational Risk • Back office processing (confirmation /affirmation & Trade Allocation) • Surveillance/Monitoring Complexity of Trade/Settlement Processing Investor Growth Increase Transaction (Volume, Value, Frequency) Issuer Growth STP Development • Business process improvement : • Business orientation & efficiency • Trading, clearing, & settlement mechanism • Risk Management Improvement : • Effective Surveillance/Monitoring • Excellent/prudent business operation • Global Trend : • Floor to remote to online trading • Direct Market Access (DMA) through Securities Companies • Cross border (cross listing, cross member, cross trading, cross clearing, cross settlement) Volume Increase: Scripless BACKGROUND • Capacity Building • Market Infrastructure Ready to Handle Market Growth

  4. BENEFIT • Improve process capacity. • Reduce input redundancies and manual intervention. • Improve transparency. • Provide better management with systematic audit trail. • Minimize risk and reduce errors. • Increase speed of data processing, withdrawal and generating reports. • Improve overall efficiency such as funding cash.

  5. Business Process Identification Manual Transaction Order Different Trading platforms Existing Funding Cost Development of Remote & On Line Trading Integrated & Multiproduct Trading System. CB as settlement agent & CM Stratification. S T P Registration, Administration Of Investor Order Validation Matching Confirmation/ Affirmation Clearing Settlement Implementation of ‘Master Client ID’ Automatic allocation, confirmation/ affirmation Real-time interface for EM & CB Risk Management System Enhancement Client Investor Identity distributed to every EM Order Pre-validation (gross). ‘Investor Area’ Development Existing manual confirmation/ affirmation Registration/administration of Client Investor is conducted by each EM Trading Limit (batch, upload/download, multiproduct yet). manual entry/ upload for settlement instruction Note: CM = Clearing Member EM = Exchange Member CB = Custodian Bank OTC Transaction /instruction still difficult to monitor

  6. BUILDING BLOCKS STP Client ID Investor Area Real-time Interface Enhancement Risk Mgt System Membership Stratification Information & Corporate Action Integrated Network & BCP OTC Pre-matching Single Trading Platform Settlement Agent

  7. Client Investor SX Member Client ID Client ID Master Client ID & Client ID 1 6 2 5 Master Client ID Stock Exchange Client ID Client ID Client ID 3 K S E I K P E I 7 Sub Account 8 Settlement Account Settlement Account 4 Collateral Account Collateral Account

  8. SX Member Client Investor Custodian Bank Custodian Bank as Settlement Agent 6 1 Client ID 2 5 Master Client ID Client ID Client ID Client ID 3 Stock Exchange 7 Sub Account 8 11 K S E I Settlement Account Settlement Account K P E I 4 Risk Mng. Account Risk Mng. Account 10 Settl. Agent Account Settl. Agent Account 9

  9. CB Cash Cash b c CB Funding Cash d a Securities Securities b OTC 2 e Securities BANK CM 1 a Collateral KPEI f 3 Cash KPEI Exampleof STP Impact – Reduce Funding Cash Custodian Bank as Settlement Agent Funding Cash

  10. THANK YOU

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