Indonesia prepares new Securities Finance Agency to provide financing

The Financial Services Authority (“OJK”) has issued a regulation that provides a detailed framework for the establishment of a dedicated Securities Finance Agency (Lembaga Pendanaan Efek / “SFA”) so as to boost transaction volume and liquidity in the Indonesian stock market by, in particular, encouraging margin trading and short selling.

Upon establishment, the SFA will provide securities financing to brokerage firms, which are currently handicapped by limited internal resources and a lack of access to funding from banks and other sources. Accordingly, the SFA is expected to provide an alternative source of financing to brokerage firms to fund margin-trading and short-selling, as well as other types of securities transactions.

The new regulation (OJK Regulation No. 25/POJK.04/2018 / “Reg. 25”) entered into effect on 5 December 2018.

More information from law firm ABNR is available at

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