The Indonesia Clearing and Guarantee Corporation (IDClear) announced the soft launch of a bilateral securities lending and borrowing (SLB) facility.
“The introduction of an onshore bilateral SLB facility will facilitate investors to engage in transparent, well-regulated and covered short selling activities in Indonesia, increasing the liquidity and efficiency of the country’s capital markets,” said Jason Wells, chair of the Pan Asia Securities Lending Association (PASLA), in a statement. “We believe it will enable better price discovery and greater market resilience, especially during periods of heightened volatility.”
As a form of contribution in boosting transaction liquidity in the Indonesian capital market, IDClear has a role as a central counterparty and arranger of exchange and non-exchange transactions clearing activities. As part of the market infrastructure market, one of the facilities that IDClear provides is Securities Lending and Borrowing (SLB).
The Bilateral SLB facility is offered to complement the previously existing SLB facility, namely securities lending and borrowing with a negotiated transaction mechanism based on an agreement between the lender and the borrower, which in this case is then managed through the bilateral SLB scheme.
The Bilateral SLB facility is more flexible in concept, including in terms of amount of fee, amount of collateral value, loan period, type of loan and collateral securities including bonds, and amount of securities returned. With the Bilateral SLB facility, securities lending and borrowing transactions will become more regular and fair. In addition, Bilateral SLB allows market participants to optimize all securities that are eligible for transaction through the Bilateral SLB facility.
“This development comes at a time when Indonesia’s IPO market ranks as the world’s fourth largest year-to-date thanks to the country’s robust growth prospects and importance in supply chains for the global energy transition,” Wells said in a statement.
“Global investors are looking to increase their participation in the Indonesian market. This trend will be accelerated with regulatory changes like the introduction of bilateral SLB which aligns with international best practices. PASLA will continue to work with the Indonesian authorities to help facilitate the development of securities lending and the broader equity market.”