KSEI president director Margeret Tang, right, and BI Deputy Governor Ronald Waas agree that using the RTGS system will allow securities firms and custodian banks settle transactions in an easier and faster manner. (Antara Photo/Teresia May)

KSEI Launches More Efficient Securities Settlement Through Central Bank


JUNE 30, 2015

Jakarta. The Indonesian Securities Central Custodian, or KSEI, the country's securities depository and settlement institution, is now using the central bank's real-time gross settlement, or RTGS, system for all electronic funds transfers.

"We believe using RTGS will further increase investors' trust," Margeret Tang, the KSEI president director, told reporters on Monday.

Before the switch, which took place on June 18, cash settlements for securities transactions were performed via five designated commercial banks appointed by the KSEI. However, the system resulted in delays and low turnovers from securities transactions.

"Whether the amount of transactions increases will depend on the market," Margeret said. "However, the turnover will be much faster and more efficient."

In June, the KSEI has on average dealt with daily transactions worth around Rp 2 trillion ($150 million) from customers who traded in the Indonesian capital market. Bank Indonesia, the central bank, said the use of RTGS would reduce risks arising from lenders' default and liquidity risks.

"The other advantage, for example, is competitiveness," BI Deputy Governor Ronald Waas said. "Each bank can settle capital-market transactions without having to own corresponding accounts in other institutions."

Supranoto Prayogo, vice chairman of Indonesia's Custodian Banks Association (ABKI), in a statement agreed that the KSEI's move would increase efficiency and allow custodians to move the settlement funds directly to their accounts at BI without intermediaries.