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Straight Through Processing (STP)

Development Concept & Roadmap


Indonesian Central Securities Depository (KSEI) Indonesian Central Counterparty (KPEI)

AGENDA
1 2 STP Background Business Process Identification

KSEI & KPEI Initiatives

BACKGROUND
Socialization/ Education Various Products: Equity, Fixed Income, Derivatives Complexity of Trade/Settlement Processing

Challenges :
Funding Issues - Funding cost (turn around transaction) Inefficiency Risk Issues : - Operational Risk - Back office processing (confirmation /affirmation & Trade Allocation) - Surveillance/Monitoring

Investor Growth

Issuer Growth

Increase Transaction (Volume, Value, Frequency)

Capacity Building Market Infrastructure

STP Development
Global Trend : - Floor to remote to online trading -Direct Market Access (DMA) through Securities Companies -Cross border (cross listing, cross member, cross trading, cross clearing, cross settlement) Business process improvement : - Business orientation & efficiency - Trading, clearing, & settlement mechanism Risk Management Improvement : - Effective Surveillance/Monitoring - Excellent/prudent business operation

Volume Increase: Scripless

Ready to Handle Market Growth

BENEFIT
1. 2. 3. 4. 5. 6. Improve process capacity. Reduce input redundancies and manual intervention. Improve transparency. Provide better management with systematic audit trail. Minimize risk and reduce errors. Increase speed of data processing, withdrawal and generating reports. 7. Improve overall efficiency such as funding cash.

Business Process Identification


Manual Transaction Order Different Trading platforms

Existing Funding Cost


CB as settlement agent & CM Stratification.

Development of Remote & On Line Trading

Integrated & Multiproduct Trading System.

Registration, Administration Of Investor

Order

S T P
Validation Matching
Risk Management System Enhancement Order Pre-validation (gross). Trading Limit (batch, upload/download, multiproduct yet).

Confirmation/ Affirmation

Clearing

Settlement

Implementation of Master Client ID Client Investor Identity distributed to every EM Registration/administrati on of Client Investor is conducted by each EM

Automatic allocation, confirmation/ affirmation

Real-time interface for EM & CB Investor Area Development manual entry/ upload for settlement instruction

Existing manual confirmation/ affirmation

Note: CM = Clearing Member EM = Exchange Member CB = Custodian Bank

OTC Transaction /instruction still difficult to monitor 5

BUILDING BLOCKS

STP
Client ID Investor Area Real-time Interface Enhancement Risk Mgt System Membership Stratification

Information & Corporate Action

Integrated Network & BCP

Single Trading Platform

Settlement Agent

OTC Pre-matching

Master Client ID & Client ID


Client Investor Client ID

1
SX Member Client ID

2
Master Client ID Client ID

Client ID

Client ID
K P

3
K

7
Sub Account Settlement Account Collateral Account Settlement Account Collateral Account

S t o c k E x c h a n g e

S
E I

E I

10

Client Investor

Custodian Bank as Settlement Agent


6 5

1
SX Member

Client ID

2
Master Client ID Client ID

Client ID

Client ID
S t o c k E x c h a n g e

3
Sub Account Settlement Account Risk Mng. Account 10
Settl. Agent Account Settl. Agent Account

7
11 Settlement Account Risk Mng. Account

8
K P E I

S
E I

9
Custodian Bank

11

Example of STP Impact Reduce Funding Cash


Funding Cash
CB

Custodian Bank as Settlement Agent

Cash c

CB

2 OTC b Cash
Funding

d Securities
Cash b

a Securities

BANK

CM

e Securities 3 f
Cash KPEI

a Collateral

KPEI

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