Indonesia launches central counterparty clearing house

INDONESIA launched on Monday (Sep 30) a central counterparty clearing house (CCP) for foreign exchange and money market transactions as it aims to deepen the capital markets of South-east Asia’s largest economy. The CCP should help integrate Indonesia’s currently fragmented and segmented money and foreign exchange markets, facilitating liquidity for banks by reducing default and other market risks, Bank Indonesia (BI) has said.

“With the CCP we hope the volume of transactions in the money market and the FX market will increase quickly,” Bank Indonesia governor Perry Warjiyo said.

Domestic Non-Deliverable Forwards (DNDF) and repurchase agreements (repo) are the instruments that will be facilitated first by CCP, Warjiyo said.

BI expects that in five years the CCP could increase the daily DNDF transactions volume from US$100 million currently to US$1 billion. Meanwhile, repo transactions it hopes will grow from 14 trillion rupiah (S$1.2 billion) per day currently to 30 trillion rupiah per day in 2030. REUTERS