Wider bank powers, demutualised exchanges, and a new financial centre: Highlights of Indonesia Law No. 4 of 2026

4 August 2026

On 17 June 2026, Indonesia enacted and brought into force Law No. 4 of 2026 (“Law 4/2026”), which amends Law No. 4 of 2023 (“Law 4/2023”) on Development and Strengthening of the Financial Sector. Both Law 4/2023 and Law 4/2026 are omnibus laws that amend various laws across the financial sector.

The key amendments introduced by Law 4/2026 are summarised below.

Commercial bank business activities

Law 4/2026 expands the scope of business activities that commercial banks may undertake beyond those permitted under Law 4/2023. Commercial banks may now provide other financial services on a phased basis, taking into account the potential impact of those services on the stability of the financial system. These services include pawnbroking, guarantee services, export financing, secondary housing finance, and peer-to-peer lending.

The newly permitted activities are in addition to those that commercial banks were already authorised to undertake under Law 4/2023, namely:

  • making equity investments in financial services institutions (“FSIs”) and/or other companies that support the banking industry. FSIs include institutions engaged in banking, capital markets, insurance, pension funds, venture capital, microfinance, and financing activities. Other companies that support the banking industry include information technology companies, financial technology companies, clearing institutions, and switching companies;
  • making temporary equity investments in non-FSIs to address the consequences of credit defaults or sharia financing defaults, provided that the investments are subsequently divested;
  • acting as the founder and administrator of pension funds; and/or
  • cooperating with other FSIs and non-FSIs in providing financial services to customers. Cooperation with other FSIs may include marketing of insurance products, marketing of mutual fund products, administration of pension programmes for commercial bank employees, channelling of loans, and other financial products. Cooperation with non-FSIs may include cooperation with information technology companies in the development of digital services.

Capital markets

Stock exchange demutualisation

Law 4/2026 strengthens Indonesia’s capital market framework by introducing the demutualisation of stock exchanges.

Under Law No. 8 of 1995 on Capital Markets (“Law 8/1995”), the shareholders of a stock exchange are limited to securities companies licensed to conduct broker-dealer activities. Law 4/2026 revises this framework as follows:

  • A stock exchange must be established as a limited liability company by a minimum number of unaffiliated limited liability companies. Law 4/2026 further clarifies that the minimum number of founding companies is intended to ensure a healthy competitive environment for trading activities on the stock exchange. The founders of a stock exchange must not be affiliated with one another, and participation must be open as broadly as possible to eligible companies in order to prevent collusion and market dominance by a particular group of companies. Founding shareholders may also become exchange members.
  • The shareholders of a stock exchange may consist of Indonesian individuals and/or Indonesian legal entities, whether or not they are exchange members. This expands the previous provision under Law 8/1995, which limited stock exchange share ownership to securities companies. This change reflects the transformation of stock exchanges from member-owned (mutual) organisations into demutualised, profit-oriented entities. The objective is to enable stock exchanges to respond more effectively to the rapid pace of global market developments. As profit-oriented entities, stock exchanges may attract strategic investors capable of contributing to their growth and development. Their demutualised status also allows them to become publicly listed companies. The conversion of a stock exchange from a mutual, non-profit organisation into a demutualised, profit-oriented entity must be carried out in accordance with the applicable laws and regulations.

Stock exchange shareholders

Law 4/2026 introduces a new provision under which the Ministry of Finance, Bank Indonesia, and the Danantara Sovereign Wealth Fund (“Danantara SWF”) may become shareholders of a stock exchange. Any shareholding by these institutions must not compromise the independence of the stock exchange.

Variation margin in financial market transactions

Law 4/2026 introduces new provisions on variation margin in financial market transactions.

To ensure the settlement of financial market transactions, transaction participants may provide (i) initial margin as collateral, or another equivalent form of margin, and/or (ii) variation margin, or another equivalent form of margin. Law 4/2026 clarifies that both the provision of initial margin as collateral and the transfer of variation margin constitute forms of collateral transfer.

Variation margin is transferred through a transfer of title arrangement under which the margin is used to satisfy obligations arising from changes in the value of a transaction, to the extent required or agreed under a variation margin agreement. Changes in the value of a transaction refer to periodic mark-to-market adjustments in a financial transaction resulting from changes in market prices, including fluctuations in exchange rates, securities prices, and/or the value of margin previously provided.

A variation margin arrangement must satisfy at least the following requirements:

  • the transfer of title to the margin from the margin provider to the margin recipient;
  • the right of the margin provider to receive the return of equivalent margin from the margin recipient once all obligations relating to the transaction have been discharged; and
  • the right of the margin recipient to use, transfer, pledge, and/or take other legal actions with respect to the transferred margin in accordance with the agreement.

Financial sector technological innovation

Law 4/2026 strengthens the regulatory framework for the crypto asset industry by expanding the categories of entities that may operate as financial sector technological innovation providers (“FinTech Providers”).

In addition to FSIs and other entities conducting activities in the financial sector, which were already recognised as FinTech Providers under Law 4/2023, Law 4/2026 now expressly includes FSIs for crypto assets (“Crypto Asset FSIs”) and FSIs for digital financial assets other than crypto assets (“Non-Crypto Digital Asset FSIs”).

Law 4/2026 introduces new provisions governing Crypto Asset FSIs including requiring them to obtain a business licence from the Financial Services Authority (Otoritas Jasa Keuangan “OJK”) in accordance with the scope of their business activities. Law 4/2026 does not specify any licensing requirements applicable to Non-Crypto Digital Asset FSIs.

Crypto Asset FSIs comprise:

  • crypto asset traders;
  • crypto asset exchanges;
  • crypto asset clearing, guarantee, and settlement institutions;
  • centralised crypto asset custodians; and
  • other parties designated by OJK.

A Crypto Asset FSI may be owned either by the public at large or by a limited group of parties. The law clarifies that ownership by a limited group of parties reflects the mutual nature of the Crypto Asset FSI. Further provisions governing Crypto Asset FSIs will be set out in a forthcoming OJK Regulation.

Strategic minerals and commodities exchange

Law 4/2026 introduces new provisions governing a strategic minerals and commodities exchange (“SMC Exchange”). The SMC Exchange is an organised and integrated market system for the trading of strategic minerals and commodities, including their derivatives.

The SMC Exchange must be operated by a market operator that has obtained a business licence from OJK. It is scheduled to be established and commence operations on 1 January 2027.

Further provisions concerning the SMC Exchange will be set out in an OJK Regulation following approval by the House of Representatives.

Indonesia International Financial Centre

Law 4/2026 mandates the Government to establish the Indonesia International Financial Centre (“IIFC”).

The IIFC is intended to be a distinct jurisdiction with its own financial and administrative autonomy and a special legal framework aligned with international principles and standards. Its principal objectives include: (i) promoting financial sector deepening and innovation; (ii) attracting domestic and international investment, as well as financial sector participants; and (iii) facilitating financing for the real sector, national strategic projects, sustainable finance, climate finance, infrastructure finance, and other financing activities.

The IIFC will be governed by a dedicated law, which must be enacted no later than 17 September 2026.

Special financial instruments

Law 4/2026 introduces a new regulatory framework allowing Danantara SWF to issue both debt securities and special debt securities, including Patriot Bonds and Merah Putih Bonds.

Under this framework, any purchase of special debt securities by an investor constitutes a valid transaction within the national financial system. Investors include taxpayers who have participated in tax amnesty and voluntary disclosure programmes and are permitted to transfer and pledge their special debt securities.

The law also provides extensive legal protections for investors. The State guarantees and protects investors against prosecution under general criminal law, special criminal law (including tax offences), and civil claims. In addition, data and information derived from the purchase of special debt securities may not be used as a basis for tax assessments or admitted as evidence in judicial proceedings. These guarantees, protections, and immunities apply to transactions conducted in the primary market.

Restorative justice in the financial services sector

Law 4/2026 amends Law 4/2023 by introducing a dedicated framework for settling financial services sector criminal cases through restorative justice, harmonised with the provisions of the Criminal Procedure Code.

Restorative justice may be implemented at the inquiry, investigation, or prosecution stages or at trial and may be applied to all criminal offences in the financial services sector, subject to a prior assessment by the relevant sector investigator.

At the inquiry and investigation stages, the investigator must evaluate the application of or proposal for restorative justice and calculate the associated losses.

In conducting this assessment, the investigator must consider, at a minimum:

  • whether the losses arising from the criminal offence have been settled;
  • the transaction value and/or the amount of loss resulting from the alleged criminal offence; and
  • the impact on the financial services sector, financial services institutions, the public, or the interests of customers, financiers, and/or investors.

This resolution mechanism is available provided that the offense is committed for the first time, or that it does not constitute a repeat offence, except where the previous conviction resulted solely in a fine or where the offence was committed through negligence. Further, at the inquiry and investigation stages, OJK investigators must coordinate closely with the National Police when implementing restorative justice.

The manner in which restorative justice is initiated depends on the procedural stage. It may be initiated either by an application from the alleged offender, suspect, defendant, or victim (including their respective families), or via a formal proposal from the handling inquirer, investigator, public prosecutor, or judge. Once a settlement is reached, it must be documented in a written agreement, and the responsible party must fully implement its terms, including the payment of compensation. This compensation remains the exclusive right of the injured party.

Upon full performance of the settlement agreement, the relevant authority may terminate the inquiry, investigation, or prosecution, as applicable, subject to the notification and court stipulation requirements under Law 4/2026. If initiated at the trial stage, restorative justice may be implemented directly through the court judgment and the subsequent enforcement of that judgment.

Importantly, a restorative justice resolution does not preclude administrative enforcement. In addition to paying compensation, the alleged offender may still be subject to administrative sanctions imposed by OJK. These sanctions may include written warnings, product or service restrictions, business suspensions, management removal, administrative fines, or the revocation of product approvals and business licenses.

Within the capital market sector, any criminal case resolution through restorative justice during the inquiry phase may only be conducted by National Police inquirers acting upon the direct instruction of National Police investigators.

In assessing whether restorative justice is appropriate for alleged capital market offences, the National Police inquirer must consider, at a minimum:

  • the transaction value or overall scale of the offence;
  • whether all losses arising from the offence have been fully settled;
  • the effect of the offence on securities offering and/or trading activities as a whole; and
  • the impact of the resulting losses on the capital market system, investor interests, and/or the public.

Transitional policies

Trading operators for digital financial assets, including crypto assets, that obtained approvals or licences from the relevant authorities before the transfer of regulatory and supervisory authority over digital financial assets, including crypto assets, to OJK, and that subsequently obtained approvals or licences from OJK following such transfer, are recognised as Crypto Asset FSIs or Non-Crypto Digital Asset FSIs, as applicable. Their shareholders, controlling shareholders, and key parties are likewise recognised under Law 4/2026.

Crypto Asset FSIs and Non-Crypto Digital Asset FSIs that obtained business licences prior to 17 June 2026 are deemed to have obtained business licences under Law 4/2026.

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