Indonesia Central Securities Depository Indonesia Fund Service KSEI

Indonesia Central Securities Depository Indonesia Fund Service

KSEI at a Glance

About KSEI • PT Kustodian Sentral Efek Indonesia (KSEI) was established on December 23, 1997, pursuant to the Capital Market Law No. 8 year 1995. • KSEI is a Self Regulatory Organization (SRO) within the framework of the Indonesia capital market. • KSEI obtained its business license from the Financial Services Authority (OJK) on November 11, 1998 to provide Central Securities Depository services.

About KSEI Function • Providing orderly, fair, and efficient central Securities depository and transaction settlement services. Scripless Depository • Equity (stock, right, warrant) • Debt (bonds, Medium Term Notes – MTN, Negotiable Certificate of Deposit – NCD, Promissory Notes – PN, Commercial Paper – CP, Sukuk, Central Bank Certificate – SBI, Treasury bills – SPN) Transaction Settlement • Settlement of stock exchange transactions • Settlement of over-the-counter transactions Additional service products • Distribution of corporate action activities • Reporting • Generate ISIN Number • Generate Single Investor Identity (SID) • Investors’ Account Statement - AKSes Facilitiy

KSEI Stakeholders Indonesia Financial Authority (OJK) Central Bank Indonesia Stock Exchange Securities Companies Indonesia Clearing & Guarantee Corporation Issuer Registrar Payment Bank Investment Manager Investor Custodian Bank

KSEI’s Journey S-INVEST Live KSEI as SRO Scripless Trading & Settlement 1997 Central Bank Sub Registry 2002 2000 1998 2001 KSEI as CSD DRC C-BEST Live Settlement T+3 2006 2004 AKSes Facilities AKSes Facility via Channel Bank 2009 2008 ORCHi. D Swift Member Historical Data & Reporting Apps 2014 2012 SID & RDN 2016 2015 Central Bank Money for Custodian Bank

KSEI Strategic Plan Market Deepening, Improve Liquidity, and Investor Protection PRIMARY MARKET 1 C-BEST ENHANCEMENT SID T+2 IPO C-BEST Next-G ORI SUKUK 3 CO-BRANDING PARTICIPANTS Securities Company AKSes Financial Hub Custodian Bank 2 S-INVEST Order Routing Subscription Individual Institutions OTHER SERVICES Portfolio Investor Cash Account Instructions PTP INVESTOR Redemption Bank Networking Investment Manager Selling Agent AKSes KSEI COLLECTIVE INVESTMENT Simplification Account Opening e-Voting e-announcement

Indonesia Fund Market Overview

Previous Condition Investors Regulator SA Order Routing RD § Subscription § Redemption § Switching Order Routing Reporting Order Routing Instructions CB IM PTP Instructions Placement Deal Transaction Deal BR (Sec/Bank) Settlement / Placement Banks • Securities purchase/sale transaction for Fund’s Portfolio • Time Deposit placement in Banks

Challenges No Centralized Platform No Real-time Supervision The electronic media and formats used are different from one participant to another. No centralized platform that allows real time monitoring and supervision by regulators for the best interest of the Investors Manual Operations No Standard Codes Most of the activities within and between counterparties are done manually. Lack of standardized codes increases inefficiencies among participants.

Centralized New System SA SA SA CB CB Investor BR Investor ? BR Bank IM IM Bank IM

Project Overview Project Title Project Period Project Objective Project Approach S-INVEST Development Project Business Consultancy : Nov 2014 – May 2015 System Development : Jun 2015 – Aug 2016 Integrated & Centralized System for efficient Indonesia Fund Market industry Cooperation with other CSD Participant Driven Cooperative Development

Development Story Key Success Factors Supports from Regulator Usage of the system shall be mandatory, regulated, and supervised by the Financial Services Authority (OJK). Challenges Information Asymmetry Socializations and trainings need to be conducted to close the information gap among industry players. Backoffice Enhancements Adjustments to the participants’ back office systems are required to be completed by the participants to meet new system requirements. Data Migration Gathering and cleansing of huge and various market/industry data to meet the closing deadline is quite a challenge. Supports from Industry Associations The development of the system heavily involves the cooperation of the association of Custodian Banks (ABKI), association of Investment Managers (APRDI), association of Selling Agent Banks (ABAPERDI), and the association of Securities Companies (APEI). Close Communication between KSEI as the system provider and the market participants is also the key to a successful preparation and implementation of the system.

S-INVEST Business Model and Infrastructure

System Development = + Starting Point Formulation The system was developed with reference to the already well-established Centralized Fund Platform. The system is built from scratch in order to meet the requirements from the Indonesian fund market industry players as well as the different business practice and regulations between the referred system and Indonesian fund industry. A working group is established to provide inputs on the system’s functionality.

S-INVEST Modules Order Routing • • • Subscription Redemption Switching Distributed Income Fund Liquidation Post Trade Processing • Trade Details • Trade Allocation • Trade Matching Process • Settlement Instruction • OTC instruction creation for settlement in Central Depository System Reporting • Delivery of reports to Regulator • Delivery of NAV Data and reporting to Media

Standardization & Processes Membership / Role Funds / Securities • Selling Agent • Investment Manager • Custodian Bank • Broker • Conventional Funds* • Private Equity Funds • ETF** • REIT** • Discretionary Funds** Accounts • Investor Fund Unit Account • Fund Cash Account • KSEI Cash Account Parameters • • Currency Calendar Mid Rate Settlement Window • Etc *) Conventional Funds : Money Market Funds, Equity Funds, Fixed Income Fund, Mixed Funds, Structured Funds (Protected Funds, Guaranteed Funds, and Index Funds). **) For PTP Messaging (Settlement Instruction Deliveries) only.

CEBM Implementation – S-INVEST CIRT IBPA

Investors S-INVEST Fund Subscription

Fund Industry Growth 30, 000 1400 25, 282 1200 1000 20, 000 19, 122 19, 955 17, 005 19, 656 19, 895 800 16, 197 15, 000 600 10, 000 400 5, 000 - 200 603 631 683 760 855 1036 1316 2010 2011 2012 2013 2014 2015 2016 Funds AUM in US$ Mio 0 Funds AUM in US Dollar (Mio) 25, 000

Single Investor ID (SID) Format Investor Status : Domestic, F : Foreign. 1 2 Investor Type: 3 ID: Individual Investor. SC: Securities Companies. MF: Mutual Fund. PF: Pension Fund. CP: Corporate. IB: Institution Bank. IS: Insurance. FD: Foundation. IM. : Investment Management OT: Others. Client Trading-ID 4 5 6 Date & Month. : 7 8 Birth Date and Month Establishment Date and Month Format : DDMM 9 10 11 12 13 14 15 Check Digit

AKSes Description AKSes • This facility enable Securities Company and Custodian Bank to grant their client an access to inquiry the balance position and its movement of Securities or other portfolio record owned in Sub Securities Account in KSEI. Benefits • To provide additional information required by investor as well as transparency in Indonesia capital market industry. • To provide investor consolidated portfolio reports spread out in several Securities Company and Custodian Bank. Investor Management Broker/ Custodian Bank Inquiry Balance Movement Features • Single Investor ID • Monitoring functionality for the clients to inquiry balance position and its movement approval Investor

Closing Remarks

Conclusion Mutual Fund Investors Unit Trx Values Asset Trx Volume Asset Trx Values Product Variances Product Numbers 2016 Market Players

PT Kustodian Sentral Efek Indonesia Gedung Bursa Efek Indonesia Tower 1 Lt. 5 Jl. Jend Sudirman kav 52 -53, Jakarta 12190 Call Center: (62 -21) 515 2855 Toll Free: 0800 186 5734 www. ksei. co. id