Indonesia sets the stage for structured derivatives oversight : AGI Legal

4 June 2025

Indonesia Financial Services Authority (Otoritas Jasa Keuangan (“OJK”)) Regulation No. 1 of 2025 on Financial Derivatives Based on Securities as Underlying Assets (“Regulation No. 1”) came into effect on 10 January 2025. It revokes OJK Regulation No. 32/POJK.04/2020 on Derivative Contracts on Securities.

Regulation No. 1 is an implementing regulation of Financial Law No. 4 of 2023 (“Financial Law”), and mandates the provision of full supervisory authority over financial derivatives (“FDs”) to OJK as of 10 January 2025 (that is, two years after the enactment of the Financial Law). FDs were previously supervised by the Commodity Futures Trading Authority (Badan Pengawas Perdagangan Berjangka Komoditi (“Bappebti”)) alongside OJK.

The transfer of FDs supervision from Bappebti to OJK aims to provide legal certainty for the continuity and development of FDs, derivatives market participants, and derivatives market infrastructure providers previously licensed by Bappebti.

This article provides an overview of the impact of Regulation No. 1.

Financial derivatives

Regulation No. 1 broadens OJK’s supervisory scope over FDs contracts. Under the previous regulation, such contracts were limited to derivatives based on securities, including debt instruments, commercial papers, shares, bonds, debentures, collective investment contract participation units, securities futures contracts, and other securities derivatives.

Regulation No. 1 expands the definition of “securities” to cover all forms of securities or investment contracts - whether conventional, digital, or otherwise - aligned with technological developments. These must entitle the holder to receive economic benefits, either directly or indirectly, from the issuer or another party based on an agreement. The expanded definition also includes any securities derivatives of securities that are transferable and/or tradable in the capital market. These “securities” can now serve as underlying assets for FDs.

FDs include:

futures contracts, Sharia derivative contracts, and other derivative contracts based on stock indices, securities or groups of securities traded on stock exchanges or alternative trading system operators, government securities or groups of government securities, foreign stock indices, or foreign single stocks as underlying assets. An underlying asset is a financial asset used as the basis for a derivative contract transaction;
securities options contracts, including stock options contracts listed on the Indonesia Stock Exchange; and
other derivatives contracts established by OJK.

In addition, OJK is authorised to establish FDs based on securities as underlying assets, such as carbon unit derivatives.

Approval by OJK

FDs that are to be traded must obtain OJK approval for listing by submitting the following information as stipulated by Regulation No.1:

Background and objectives of the derivatives contract;
Basis for selecting the underlying assets;
Specifications of the derivatives contract, including its type, duration, and required collateral;
Trading, clearing, guarantee, settlement, supervision, and risk management systems for the derivatives contract; and
Application of similar products in other countries; and
Evidence of:
- the readiness of infrastructure for trading, supervision, clearing, guarantee, and settlement of derivatives contracts;
- support from members of derivatives trading venues, including the readiness of securities valuation;
- support from securities valuation institutions for derivatives contracts that use debt securities and/or sukuk as underlying assets;
- an agreement with index providers or exchanges, or approval of the underlying assets by index providers or exchanges as the owners of the underlying assets; and
- the rules and terms governing the derivatives contracts.

An application for OJK approval must be submitted by stock exchanges or alternative trading system operators together with clearing guarantee institutions or derivatives trading venue operators along with other derivatives clearinghouse operators.

For FDs contracts whose value is derived from, or depends on, the value of debt securities (such as bonds) and/or sukuk (Islamic-compliant bonds), the derivatives venue operator must use market prices and/or stock indices published by securities valuation institutions.

For FDs based on foreign stock indices or individual stocks, the derivatives venue operator must either have an agreement with the relevant index provider or stock exchange or comply with their applicable requirements.

Derivatives trading venue operators, futures traders, and/or brokers licensed by Bappebti must submit FDs approved by Bappebti to OJK for in-principle approval. The submission must be supported by, at a minimum, (i) the results of the derivatives contract study; (ii) the specifications of the derivatives contract; and (iii) a copy of Bappebti’s approval.

Derivatives market participants and infrastructure providers

The table below provides an overview of the key participants and infrastructure providers in Indonesia’s FDs market, including their licensing and approval requirements.

Derivatives market participants
Participant type	Description
Derivatives broker-dealers	Includes securities companies operating as broker-dealers and their representatives; futures traders, futures brokers, and futures broker agents licensed by either Bappebti or OJK; and holding in-principle approval from OJK as derivatives broker-dealers.
Investment advisors	Includes investment advisors licensed by OJK and futures investment advisors licensed by Bappebti, with in-principle approval from OJK as investment advisors.
Derivatives market infrastructure providers
Participant type	Description
Derivatives trading venue operators	Includes stock exchanges or alternative trading system operators licensed by OJK; other trading venues approved by OJK; and futures exchanges or clearinghouses licensed by Bappebti with in-principle OJK approval. Bappebti-licensed operators may engage in FDs activities only after obtaining in-principle approval from OJK.
Clearing, guarantee, and settlement operators	Includes clearing guarantee institutions licensed by OJK and infrastructure providers licensed by Bappebti. Bappebti-licensed providers may engage in FD clearing, guarantee, and settlement activities only after obtaining in-principle approval from OJK.
Depository and administration providers	Includes central securities depositories licensed by OJK and fund deposit providers licensed by Bappebti. Fund deposit providers must obtain in-principle OJK approval to engage in FDs-related deposit activities.
Derivatives trade repositories	Provide systems and venues for receiving transaction reports as designated by OJK.

Reporting

Parties that have obtained licenses, approvals, and/or registrations for FDs from OJK, including those with in-principle approval, must comply with reporting obligations. They are required to submit periodic and incidental reports via https://ereporting.ojk.go.id and adhere to applicable regulations. Those involved in commodity futures trading must report in accordance with the relevant commodity futures trading regulations, while all other parties must comply with OJK’s reporting requirements for the relevant entities.

Transitional policies

Futures traders and/or brokers (including futures broker agents), investment advisors, other derivatives trading venue operators, as well as derivatives clearing, guarantee, and settlement operators, and fund deposit providers that have obtained in-principle approval from OJK must submit a license application to OJK no later than 10 January 2027.