An official from Bank Indonesia, the central bank of the country, revealed this Tuesday that Indonesia would limit foreign ownership of electronic trading platforms for foreign exchange (forex) and money markets, according to a report from Reuters.
According to Agusman, who is the executive director of financial market deepening at BI, as of October 31, 2019, the maximum foreign ownership for any company that provides electronic trading platforms for FX will be set at 49 percent.
Agusman, who uses one name, also told a news briefing that the company needs to operate as a limited liability entity and maintain minimum equity of 10 billion rupiahs ($700,000) and have a paid-up capital of at least 30 billion rupiahs when establishing the company.
Furthermore, for existing trading platform providers with foreign ownership, the central bank will apply a three-year transition period, to allow firms to comply with the new measures.
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In order to comply with the new cap, providers of electronic trading platforms must have safe and reliable infrastructure, adhere to rules regarding the safety of transaction data and operate with good governance.
Indonesia Limits Foreign Investment as China Opens Up
The cap from the central bank of Indonesia is the same rate that China previously imposed for securities firms – 49 percent. Before August of 2018, foreign companies could not have a stake in a Chinese securities firm that exceeded 49 percent.
However, in August of last year, the China Securities Regulatory Commission (CSRC) issued rules to raise the ceiling on foreign ownership of China-based securities firms to 51 percent.
Towards the end of last year in November, the CSRC gave the first approval for a foreign firm to take advantage of this, which was granted to Swiss firm UBS Group AG which raised its shareholding in UBS Securities Co. Ltd. to 51 percent.