This peer review examines the implementation of the G20 commitments on over-the-counter (OTC) derivatives market reforms in Indonesia.
The review finds that the Indonesian authorities have made some progress in implementing OTC derivatives reforms, while focusing on developing their domestic derivatives market. Reporting requirements have been in place for banks’ OTC foreign exchange and interest rate derivatives transactions and for other participants’ commodity derivatives transactions for many years, and there is effective sharing and use of the data collected among domestic authorities. Progress continues on central clearing requirements and margin requirements for non-centrally cleared derivatives (NCCDs), and the authorities are appropriately prioritising these areas over establishing platform trading. The report notes the authorities’ continued progress on these reforms despite pressures in the wake of the COVID-19 pandemic.
Notwithstanding this progress, the review concludes that further steps can be taken. These include:
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improving the reporting, use and public transparency of OTC derivatives data, including a timeline for adopting unique global identifiers for entities, transactions and products;
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addressing legal uncertainties relating to netting for derivatives transactions in bankruptcy in order to facilitate central clearing and margin requirements; and
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implementing the remaining OTC derivatives reforms (central clearing of standardised OTC derivatives, margin requirements for NCCDs, and capital requirements for exposures to central counterparties) in an appropriately sequenced manner.
The peer review report includes recommendations to the Indonesian authorities in order to address these issues.