Transcript PT Kustodian Sentral Efek Indonesia

Account Structure in KSEI
ACG Cross Training
Bangkok, 27-28 June 2006
KSEI – Kustodian Sentral Efek Indonesia
(ICSD – Indonesian Central Securities Depository)
Outline
• Introduction
– KSEI in Indonesian Capital Market
– Scripless Implementation Background
• KSEI Participants
• Collective Custody
– Regulation on Accounts and Sub Accounts
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Account Type & Structure
Indirect Account  Sub Accounts
Benefit & Advantage of Sub Accounts
Investor Types
Account Details & Maintenance
Transactions in C-Best
Corporate Action (Entitlement & Distribution)
Securities Holder List
Issues
Conclusion
Introduction - KSEI in Indonesian Capital Market
Ministry of Finance
Capital Market Supervisory Agency
(BAPEPAM)
Stock Exchange :
Jakarta Stock Exchange
Surabaya Stock Exchange
Scripless Trading
Indonesian Clearing and Guarantee
Institution
PT KPEI
Clearing-Netting
SRO (Self Regulatory Organization)
Indonesian Central Securities
Depository
PT KSEI
Book-entry Settlement
Introduction - Scripless Implementation Background
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Began in July 2000
Fully Scripless since June 2002
C-Best (Central depository and Book Entry Settlement System)
Stock Exchange settlement performed Electronic-Based
Time Frame Settlement (T+3) : since September 2002
OTC transaction & Settlement
Automatic transfer of securities ownership by book-entry
Automatic Corporate Actions process
• Actual Data (as of 31 May 2006) :
Total Participants : 167 entities
(148 Brokers, 19 Bank Custodians)
Total Issuers : 437 entities
Total Securities instruments : 667
(384 shares, 240 corp.bonds, 24 Warrants, 2 Rights, 11 MTN, 6 PN)
Total Asset (value of all securities recorded) : 583.303 Billion IDR
: 63.080 Trillion USD
KSEI Participants
• KSEI Participants are :
- Brokers (Securities Companies)
- Custodian Banks
- Other parties approved by Bapepam (The Capital Market Supervisory Agency);
 KPEI for the function of Stock Exchange Transaction Settlement
 Foreign CSDs for cross-border settlement
As of 31 May 2006 : 167 Participants
148 Brokers
19 Custodian Banks
• Investor opens a securities account in Securities Company or
Custodian Bank
Collective Custody
Electronic
Records KSEI
ASII 10000
ISSUER / REGISTRAR
ICSD / KSEI
BROKER/
CUSTODIAN BANK
Merrill Lynch
ASII 2000
Morgan
Stanley
ASII 1500
ING Baring
ASII 3000
Bankers
Trust
ASII 500
HSBC
ASII 2000
Northern
Trust
ASII 3000
Scrip
Records
CITIBANK
ASII 2000
Chase
Goldman
Manhattan ASII 2000
ASII 2000
Collective Custody
Legal Basis
• Law Number 8 Year 1995 of The Republic of Indonesia regarding Capital Market
Fungible :
Securities In Collective Custody issued by the same Issuer are interchangeable with
and equivalent to other Securities of the same type and class
Under the name of CSD :
Securities in Collective Custody at a Central Securities Depository shall be recorded in
the Issuer’s registry of Security-holders in the name of the Central Securities
Depository as the representative of its account-holders
Segregation of assets :
Securities Companies must comply with BAPEPAM Rules upon accepting
clients’ Securities and must :
a. register clients’ Securities in accounts that are separate from own accounts ; and
b. maintain secured facilities for safekeeping clients’ assets, under separate
records for each client.
Collective Custody
BAPEPAM Rule No. III.C.7 regarding Sub Account at ICSD :
• Client Investor is the recognized holder of securities account at Participant
• Participant is a Securities Company or Custodian Bank that has opened a securities
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account at KSEI
A sub securities account is the securities account of each client recorded in the Participant’s
security account at KSEI
• KSEI Participant is obligated to :
• open a sub account in name of each client
• record client owned securities in respective sub accounts
• assure accuracy of client securities balance (internal vs ICSD data )
• assure accuracy of client identity (internal vs ICSD data )
• KSEI is obligated to :
• hold separate administration for the recording of securities in each sub securities account
• deliver daily reports on the position of sub security accounts to respective Participants
• KSEI only maintains contact with and is responsible to respective Participants pertaining to the
administering of Sub Securities Accounts
• Investor has the right to check the accuracy of the report concerning the balance of securities he owns
(data at Participant vs data at ICSD)
Account Type
Broker B
delivery
account
Broker A
delivery
account
Custodian Bank X
receipt
Account
Own Deposit
account
Lending &
borrowing
Client Dep
Account 1
Collateral
account
Client Dep
Account 2
Own Deposit
account
Client Dep
Account A
Client Dep
account B
receipt
Account
Lending &
borrowing
Collateral
account
Own Deposit
account
Client Dep
account X
Client Dep
account Y
Client Dep
account Z
Account Structure
KSEI
Custodian Bank
Broker
Non Clearing Member
Clearing Member
Depository Acc
Cash
Sec
KPEI
Depository Acc
Cash
Sec
Delivering Acc
Sub Acc
Cash
Sec
Sub Acc
Cash
Sec
Cash
Sec
Receiving Acc
Cash
Sec
Collateral Acc
Cash
Sec
L & B Acc
Cash
Sec
Sub Acc
Cash
Sec
Sub Acc
Cash
Sec
Issuer
Registrar
Depository Acc
Cash
Sec
Payment Bank
Nostro Acc
Cash
Sec
Nostro Acc
Cash
Sec
Indirect Account
• Investors own accounts at Brokers / Custodians
• Brokers / Custodians possess their own accounts and
their clients’ accounts at KSEI
Request &
Docs
Request &
Docs
Verify
Process
Archive
Brokers/
Custodians
Investors
Confirmation
Confirmation
• KSEI holds separate administration for the recording of
securities in each sub securities account
There is No Omnibus Account
Securities Recording on Accounts
Account Holder : Br 1
Own
KSEI
Sec. A
Sec. B
IDR
Account Holder : CB 2
Cust. A
Cust. B
Sec. A
Sec. D
IDR
Sec. C
Sec. D
IDR
Own
Sec. A
Sec. B
IDR
Cust. X
Cust. Y
Sec. A
Sec. D
IDR
Sec. C
Sec. D
IDR
Br 1
Brokers /
Custodian
Banks
Investors
CB 2
Br 1
Cust. A
Customer A
Cust. B
Customer B
CB 2
Cust. X
Customer X
Cust. Y
Customer Y
Benefit & Advantage of Sub Accounts
– Investor Protection
• Assurance of separated bookkeeping for securities owned by the investor and
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those owned by the custodian
Assurance of accurate recording of investor securities ownership position
Assurance of rights attached to securities such as dividend; right to attend RUPS
(Shareholder General Meeting), as investor will be listed in the List of Shareholders
issued by KSEI
– Availability of real time investor data in KSEI, for the purpose of :
• performing corporate action
• Issuer’s reporting to Bapepam, Stock Exchange, Central Bank, for among
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others: investigation.
Monitoring share ownership of > 5%
investigation by authorities, like: Bapepam, Court of Justice, Police.
producing reports.
– Corporate action proceeds distribution efficiency.
– Assuring proper tax rate applied upon investor in the occurrence of
Corporate Action
Investor Types
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Individual Investor
– Local
– Foreign
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Institutional Investor :
– Local :
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Limited Company
Brokers
Insurance
Bank
Government of Indonesia
Pension Fund
Mutual Fund
Foundation
Jamsostek (Labor Social Security)
Cooperative
Custodian Bank
Taspen (Civil Servant Insurance Savings)
– Foreign :
• Tax Treaty (each country)
Account Details
• Account Number
AB001 – XY12 – 001 – 99
Local_Code – Client_Code – Acc_Type – CheckDigit
• Correspondent Account Number :
account on PB (mirroring acct) – only for Own Acct and Collat.Acct
• Account Description :
name of client
• Status :
Available/Blocked/Closed
• Tax ID
• Blocking Reason (if any; only for Blocked Acct.)
• ID number :
KITAS / COR / COD / NPWP
• Address
• Nationality
Account Maintenance
Open Account :
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Supporting documents will define the investor type and tax rate of the account
No documents  the highest tax rate (20%)
Upload facility (Internal use)
Modify :
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Usually to change / to adjust tax rate, address, account description.
Block/Unblock :
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To Pledge / unpledge, Lock-up by Stock Exchange, other reasons.
Close :
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Account should be zero balance
Can Not be recycled
Account linkage :
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Related to Post Trade Processing module.
To link an Investment Manager’s sub account to a custodian bank
Data and Supporting Documents
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Local Individual : Identity No and address according to Identity Card
Foreign Individual : copy of ID card if residing in Indonesia or copy of Certificate of
Tax Residence (COTR) legalized by tax office if otherwise.
Local Institution :
- Foundation, Cooperative, Insurance, Ltd. : copy of Tax Registration
- Pension Fund : copy of State Minister of Finance Decree (SKMK) and Tax Reg.
- Mutual Fund : copy of Effective Letter (from Bapepam) and Tax Registration
- Jamsostek JHT : State Minister of Finance Decree (SKMK)
- Jamsostek Non JHT : copy of Tax Registration
- Taspen : copy of Tax Registration
Foreign institution: copy of Certificate of Tax Residence (COTR) legalized by tax
office,
Foreign Institution exempted from income tax: State Minister of Finance Decree No.
574/KMK.04/2000 dated December 26th 2000
Armed Forces (ABRI) : Letter of Acknowledgement from Dir. Gen. of Tax
Indonesia Government: RI State Regulation
Transactions in C-Best
• Depository Management
– Deposit
– Withdrawal
– Security Transfer (within one Member)
• Clearing and Settlement
– DFOP/RFOP
– DVP/RVP
• Cash Management
– Book Transfer (cash transfer within one Member)
– Wire Transfer (cash withdrawal)
• Collateral Deposit
• Lendable Deposit
• Post Trade Processing
– Trade Confirmation
– Settlement Instruction
Instruction Creation
C-Best Server
Input via C-Best workstation
Instruction
Investor
KSEI
Participant
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6-eyes principle (create, check, approve)
4-eyes principle (create direct check, approve)
2-eyes principle (create direct approve)
OTC
SECTRS
BTS
WT
DCONF
REC
File upload
Instruction
Investor
Participant
Participants are responsible
for the data they input.
Stock Exchange Settlement
Selling broker
KSEI
Buying broker
Own
Account
OTC
Client
Account
Delivery
Account
Receiving
Account
Custodian
Bank
Collateral
Account
KPEI
Own
Account
stock
stock
KPEI
Account
cash
cash
alignment
L&B
Account
Client
Account
Receiving
Account
synchronize
Delivery
Account
Collateral
Account
L&B
Account
Stock
Cash
Payment Bank
OTC
Over The Counter Transaction
MATCHING
PROCESS
A
Brokers /
Cust. Banks
KSEI
1. DVP
INSTRUCTION
X
Brokers /
Cust. Banks
3. DFOP
INSTRUCTION
1. DVP : DELIVERY VERSUS PAYMENT
2. RVP : RECEIVE VERSUS PAYMENT
A
B
X
Z
B
2. RVP
INSTRUCTION
Brokers /
Cust. Banks
Z
4. RFOP
INSTRUCTION
Brokers /
Cust. Banks
3. DFOP : DELIVERY FREE OF PAYMENT
4. RFOP : RECEIVER FREE OF PAYMENT
Corporate Action
• Mandatory CA
• Voluntary CA
– Cash dividend
– IPO
– Stock dividend
– Exercise of
Right/Warrant
– Mix dividend
– Securities
– Stock bonus
conversion
– Stock split / reverse split
– Merger / acquisition
– Interest payment
– Principal payment (Redemption)
– Right / Warrant distribution
– Proxy Voting
General Process of Mandatory CA
Announcement
Date (AD)
Record
Date (RD)
Effective
date
Reminder Date
(Rem Date)
(1)
(3)
(2)
Announcement Report
(On AD/ Rem Date)
Member Entitlement
Report
(RD + 1)
Invitation Letter
(RD + 1)
Credit Entitlement of CA
(4)
Member Entitlement
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Containing the list of all accounts (including own account and clients’ sub accounts
that are entitled to proceeds of Corporate Action)
Generated on Record Date + 1
All KSEI members receive this report via workstation
Voluntary CA Process
Announcement
date
Start
Exercise
period
Instruction
Deadline Effective
date
x days *
Voluntary CA
Instructions
* The Rights/Warrants and cash positions will be debited automatically
in the exercise request amount
Distribution of CA proceed
C-Best
Back-end
system
KDPW
KDPW
ISSUER
Proceeds
Issuer’s account
Payment Bank
(cash proceed)
Registrar
(sec proceed)
member 1
Own Deps a/c
Client a/c 001
Client a/c 002
Client a/c 003
Client a/c 004
member 2
Own Deps a/c
Client a/c A
Tax
Central tax
account
Security Holder List
• Issuer / Registrar requirement
• On request (Ad hoc report)
• Containing the complete data of Security holders :
– General Data :
• Security Name & Code
• Record Date
• Total Securities Issued
– Security holder list :
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Name
ID number
Address
Investor type
Nationality
Tax rate
Member Name & Code (where the investor open the account with)
Securities Amount
Percentage of ownership
Status of account
Issues on Sub Accounts Implementation
• Still practices physical archiving of COD/COTR and other
supporting documents
• Uncertainty of investors numbers
– Some brokers do not open sub accounts for some of their clients.
– Investors may keep several accounts at different
brokers/custodians under the same or different names or ID
numbers
• Rely on the data given by brokers/custodians
Conclusion
KSEI implements Indirect Account (Sub Account)
• Does not need to deal with thousands of investors. KSEI only deals
with Participants (Brokers & Custodian)
• Reduce operational activities :
– No Counter Desk
– Participants (Brokers & Custodians) assure the accuracy of client identity.
(KYC)
• Investor Protection :
– Separate bookkeeping
– Assurance of rights attached to any CA event.
• Corporate Action process efficiency ;
– CA Entitlement & Distribution : up to investors’ depository accounts.
Thank You