KSEI as a Securities Depository and Settlement Institution
PT Kustodian Sentral Efek Indonesia (KSEI - Indonesian Central Securities Depository), is The Securities Depository and Settlement Institution in the Indonesian capital market. KSEI was established on December 23, 1997 in Jakarta and obtained its operational license on November 11, 1998. Within the structure of the Indonesian capital market, KSEI is one of the few Self Regulatory Organizations (SROs), which includes PT Bursa Efek Indonesia (BEI) and PT Kliring Penjaminan Efek Indonesia (KPEI). In regards to the capital market, under the provisions of Law number 8 Year 1995, KSEI takes its role as LPP in the Indonesian capital market by providing orderly, fair, and efficient central Securities depository and transaction settlement services.
KSEI started its operational activities which handles Securities settlements in script form. On January 9, 1998 KSEI took over a similar function from PT Kliring Deposit Efek Indonesia (KDEI), which was once the Clearing Depository and Settlement Institution (LKPP). Afterwards, on July 17, 2000, KSEI together with BEI and KPEI made a breakthrough by implementing scripless trading and central depository activities in the Indonesian capital market. KSEI shares are owned by its service users, namely: the SROs (IDX and KPEI), Custodian Banks, Securities Companies, and Registrars.
KSEI Service Users
KSEI’s Account Holders consists of Securities Companies and Custodian Banks. One of the services used by Account Holders is the investor’s portfolios administration which is able to open a Sub Securities accounts in KSEI. By opening a Sub Securities Account, the account holder can directly monitor the portfolios kept in KSEI.
Issuers whose Securities are registered in KSEI use our services to administer their issued Securities, obtain data of their shareholders and manage the corporate action distribution process.
As the party who manage the Issuers’ Securities, Registrars use KSEI’s services to assists them in managing the Issuers’ Securities that are kept in KSEI. One of the services used by Registrars is shareholders' data of their managed Issuers.
KSEI's function is to provide Securities depository and transaction settlement services, such as: electronic Securities depository, Securities transaction settlement, Securities account administration, distribution of corporate action, and other related services.
To assure a speedy, secure and satisfying settlement transaction of securities in the capital market, all KSEI’s activities are operated through an electronic securities depository and transaction settlement system known as the Central Depository and Book Entry Settlement System or C-BEST. This system is an integrated electronic platform that supports Securities transaction settlements in the Indonesian capital market. Since June 2002, KSEI had completed the conversion of all the stocks listed on Stock Exchange, from script to scripless form.
Operational activities in KSEI relies on the C-BEST. Since September 13, 2001 to safeguard KSEI’s operational activities, KSEI has a Disaster Recovery Center (DRC) which is located in a different site from the main system. The system in the DRC functions as a backup system which is able to continue data processing for no later than 2 hours after the main system breakdown. The system in the DRC has the same capacity, specification, and format with the main system. Thus enabling the DRC system to adequately replace the main system if there is an unforeseen issue. To make sure the backup system can function well, every year KSEI always performs procedural testing periodically using the DRC Live Test.
KSEI uses the Private Network Provider (PNP) to facilitate communication between KSEI and Account Holders. The PNP is a successful combination of speed and security. At present, KSEI provides 2 PNPs to allow Account holders to access C-BEST, where Account Holders can choose one of those PNPs to become their main data network provider to link to KSEI. We hope that those two PNPs can provide an improvement to data network quality, performance, and security of KSEI Users.
In addition to KSEI services in performing Securities depository and transactions settlement, KSEI keeps innovating to improve its services as well as security and efficiency in the Indonesian capital market. This will allow KSEI to compete with other similar institutions from other countries.
In July 2004, KSEI made a breakthrough by implementing a Post Trade Processing (PTP) facility. This PTP facility will enable Fund Managers to communicate with Exchange Members and Custodian Banks through a single platform: C-BEST. The PTP facility is a preliminary step for Straight Through Processing (STP) as the standard for global transaction settlement processes for the Indonesian capital market.
Since September 2004, KSEI has provided another facility known as the Online Research and Centralized Historical Data (ORCHiD). This online system facility will provide historical data and activities performed by Account Holders in C-BEST. Through ORCHiD, Account Holders can obtain and process data at anytime for the purpose of analyzing, reporting, and auditing.
In order to support the capital market, KSEI also disseminates information by providing effective and updated information concerning corporate actions through electronic mail (e-mail) as well as access through a facility called Issuer Area. This facility helps Issuers to obtain relevant information concerning their shareholders, including daily adjustments of Securities ownership, list of shareholders, and Securities pledged as collateral.
As of May 2006, KSEI has become the Sub Registry for Bank Indonesia. As such, allowing KSEI to provide depository and transaction settlement services for Government Bonds (SUN). In August of the same year, KSEI also started to provide the administration of Government Retail Bonds (ORI).
From March 2007, KSEI is able to improve its services by facilitating another type of depository and transaction settlements; namely Central Bank Certificates (SBI). This can happen because the C-BEST system has integrated with BI-SSSS (Bank Indonesia-Scripless Securities Settlement System or BI-S4) owned by Bank Indonesia, which enables an ideal single communication platform for KSEI's service users for SUN's and SBI's trading.
KSEI keeps making a series of new services and products for the development and benefit of the capital market industry. At the end of 2007, KSEI contributed to the implementation of the Exchange Traded Fund (ETF) in the Indonesian capital market. The ETF is now kept in C-BEST and can be traded at IDX.
KSEI keeps improving the transaction settlement process in the capital market by providing a automatic facility for Pre-matching activity for Over The Counter (OTC) transactions. With the availability of this facility as of April 2008, KSEI Account Holders can perform a more efficient OTC transaction settlement and reduce manual pre-matching activity as well as anticipate the existing adjournment of transaction settlement processes.
In line with C-BESTs development to provide excellent services to all users and in order to cope with the international standard related to data format and communication network, on September 6, 2008 KSEI has officially become an active member of The Society for Worldwide Interbank Financial Telecommunication (SWIFT). Supporting the communication platforms for C-BEST, the activation of SWIFT enhances communication between KSEI and Account Holders for its clients, especially foreign investors. Thus, information from KSEI to Account Holders can be delivered easier to global investors that have linked to SWIFT, and vice versa. Instruction coming from investors to Account Holders can be easily processed and forwarded to C-BEST.
At the end of 2008, KSEI also launched a depository and transaction settlement service for Assets Backed Securities (ABS). The transaction settlement process of this instrument is similar to other Securities. Account Holders can perform the settlement transaction by book-entry. Therefore, ABS issuance can be conducted electronically which improved efficiency for issuers as well as market players.
Besides the SUN and SBI, the development of other new mechanisms issued by The Government in February 2009 has provided KSEI an additional depository and transaction settlement service for Government Retail Sharia (Sukuk Ritel). Not only does KSEI performs settlements of ORI transactions as debt instruments for retail investors, but also a depository and settlement of Sukuk Ritel transactions.
In July 2009, KSEI has developed a new depository service for Limited Fund Investment Scheme (RDPT). The development is in compliance with the Otoritas Jasa Keuangan (OJK - before Bapepam-LK) Number IV.C.G rule, which is dated at February 14 2008. RDPT is an investment tool for collecting funds from professional investors. These fund will be used to further invest in Securities portfolio by investment managers.
KSEI developed an electronic reporting system for Registrars (BAE) called E-BAE, in consideration that almost all Registrars are connected to KSEI and it will be efficient to use KSEI as the reporting centre. The development is performed based on OJK review regarding shareholders information that are administered by different parties, Registrars managed shareholders information in script form and KSEI managed in scripless form.
Meanwhile, to improve efficiency in the daily activities of KSEI Account Holders; development has been made on the STP Interface system which enables C-BEST to have a host to host connection through Account Holders' back office system. This tool is expected not only to support the application of international standard formats like SWIFT, XML Message, and others, but also to replace the semi-manual activities such as uploading and downloading files performed by Account Holders.
Until mid 2012, C-BEST is able to perform depository services of various Securities: Shares, Warrants, RDPT, ETF, Corporate Bonds, Government Bonds, Sukuk, SBI, SBSN, Medium Term Notes, Promissory Notes and ABS. With the diversity of Securities recorded in C-BEST, it is expected that users will obtain more benefits from KSEI.
At the end of 2009, KSEI with other SROs and OJK are prepared in developing the infrastructure for the Indonesian capital market. This project is performed by the development team consisting of OJK and all the SROs, whose goal is to achieve the implementation of integrated Securities trading system (Straight Through Processing).
For KSEI itself, this development was started with the implementation of Investor Area facility on June 18, 2009 which later turned into AKSes (Securities Ownership Reference) on December 23, 2009. Furthermore, on June 24 2010, KSEI launched a new name for AKSes Facility known as AKSes Card, which has a more attractive design.
The implementation of AKSes Facility serves as one of KSEI’s commitments to provide protection and transparency upon the investor's investment portfolio and to improve investor’s trust to invest in the Indonesian capital market. With this facility, investors as Account Holders' clients (Securities Companies and Custodian Banks), can get real-time information related to the position and movement of Securities owned in Sub Securities Account kept in KSEI up to the last 30 days through https://akses.ksei.co.id website for free and fund kept in bank.
On December 2011, The AKSes mobile application has been developed. The needs of high mobility investors to perform regular monitoring, as well as the intensive usage of smart devices in daily activities became the motivation for developing this application. AKSes Mobile application officially launches in Jakarta on January 10, 2012, followed by AKSes Mobile campaigns in Surabaya and Medan.
AKSes Mobile application available for smart devices (smart phone and computer tablet) are produced by Apple (iPhone, iPad and iPod), Research in Motion (Blackberry) and Android based devices. AKSes Mobile application for Blackberry can be downloaded through the Blackberry App World, the Play Store for Android based smart phone/computer tablet, while smart phone/computer tablets with the iOS operating system can be downloaded from App Store. The keyword to search AKSes Mobile application through those services is “AKSes KSEI”.
KSEI Payment Bank
To provide a Securities transaction settlement services by book-entry, KSEI has appointed 5 (five) Payment Banks for the period of 2011-2015, namely PT Bank Central Asia Tbk, PT Bank Mandiri (Persero) Tbk, PT Bank CIMB Niaga Tbk, PT Bank Rakyat Indonesia (Persero) Tbk, and Bank Permata Tbk. The cooperation between KSEI and the Payment Banks is conducted concerning that KSEI, as a non-banking institution, cannot perform a fund management book-entry function, especially for payment and receiving money for users' services. Also, it is related to the requirements for the placement of fund in a specific account in the bank, pursuant to OJK Regulation Number III.C.6 regarding Operation Procedures and Internal Control of Depository and Settlement Institution. The whole funds recorded in Securities Account owned by Account Holder will be placed in Payment Banks in a specific account by KSEI.
Single Investor Identification (SID)
AKSes Facility is a preliminary step for the implementation of Single Investor ID (Single ID). It does not only aim to improve investor’s trust in investing, but it is also a success key for the development of an investor database, which is key for the realization of the capital market infrastructure development plan, such as STP and data warehouse.
SID also enables investors to monitor their Securities ownership balance, movement and instruction data related to transaction performed in IDX. Additionally, it also enables investors to monitor calculation data regarding transaction settlement rights and obligations from KPEI up to the settlement instruction data from KSEI.
SID development serve as a single identity for every investor in the Indonesian capital market. It is also intended to provide benefits to capital market authorities to perform more effective supervision toward the whole Securities transaction settlement conducted by investors and brokers, so that the misuse and abuse of investors' portfolios can be reduced.
In order to improve investor’s trust, convenience, and transparency of the Indonesian capital market industry, KSEI has developed AKSes with the facility of separation investor’s funds account and the Account Holders' account. This development is in line with the OJK Regulation Number V.D.3 regarding Internal Control of Securities Company Carrying on Business Activity as Securities Broker Dealer, since January 31 2012. With the AKSes facility, investors can monitor Securities balance and movement and also their fund balance and movement. It is expected that transparent monitoring by investors through the AKSes facility can improve the investor’s trust, so that they will more actively trading in the Indonesian capital market.
Optimization of KSEI Service Satisfaction
To achieve KSEI’s commitment in providing quality services based on international standard, on April 2001, KSEI achieved the ISO9002 certificate. Strong commitment towards the exceptional quality is being conducted through conversion of ISO9002: 1994 certification into the ISO9001:2000 which was successfully achieved on July 2003. It also remained persistent on the second renewal audit of ISO9001:2000 certification on April 2007.
Afterwards, on April 2010, KSEI has successfully conducted an upgrade of ISO Certification to 9001:2008. Up until now, an independent certification body continues to conduct periodic renewal audit to follow up on the implementation of ISO9001:2008 requirements. Thus it serves as KSEI's quality standard and to prove that the management of KSEI has performed proper monitoring upon the existing work process, as well as to maintain and improve its services.
Additionally, in order to provide best possible services to maintain the quality of services and measure the level of satisfaction of its service users, KSEI regularly performs a yearly customer survey. The customer survey was assisted by an independent consultant using the following methodology: questionnaires, visit to some service users and focus group discussions, then followed up by making an action plan to determine the needs of the service users, as well as to provide a solution. It is expected that the survey result becomes the basis for KSEI in making improvement upon its services. This activity is in line with KSEI’s commitment to provide excellent services to all service users and to meet one of the ISO9001:2000 requirements; the Customer Focus.
KSEI also tries to provide an excellent services through the Call Center management, a central information and communication for KSEI service users as well as for public, that intends to find out about KSEI’s services. This Call Center accepts queries and inputs regarding KSEI during office hours. As such, it is always expected that KSEI gives an excellent services and be able to perform well for the Call Center management.
Additionally, every two months through the publication of Bulletin called Forum Kustodian Sentral (FOKUSS), KSEI tries to give the latest information about the developments of KSEI’s services.
Enterprise Risk Management (ERM)
As part of the effort to maintain the company’s assets, KSEI has developed the Enterprise Risk Management (ERM), which is a reliable and continual risk management system. ERM's approach enables companies to identify and manage risks comprehensively, so it can minimize the corporate risks, e.g.: strategic risk, compliance risk, financial risk and operating risk and help the company to achieve its objectives.
In line with the increasing number of Securities managed in KSEI and considering the extremely-high-risk security level, KSEI has an independent party to examine the IT Security. Referring to the recommendation of the independent party, KSEI started to perform revitalization of IT Security to protect the network system from outer threat, as well as to keep providing convenience to its service users.
In order to improve risk management process, at the beginning of 2010, KSEI conducted an integration policy between Business Continuity Plan (BCP) and Risk Management. Through this program, risk management becomes more comprehensive and integrated in protecting the company’s assets and ensuring the company has longevity.
To anticipate disaster risks that might happen, KSEI also implemented a Business Continuity Plan (BCP). Should the company be unable to undertake its operational activities from its current location due a natural disaster or any other disaster happens, the objective of this strategy is to maintain the continuity of operational activities. Since, 2010 KSEI has conducted BCP testing regularly every year by all employees to ensure the BCP can perfectly operate according to standard procedure.
KSEI Educational Program
As its commitment to improve Indonesian capital market development, KSEI together with other SROs, have organized various program that are expected to improve the economy of Indonesian society. To promote and improve the capital market as well as to increase the number of investors, KSEI arranges a number of activities, such as: workshops, seminars, and interactive talk shows about investing in capital market for KSEI service users, associations, journalists, and college students.
In line with the current activities, KSEI and other SROs have committed to organize a free Capital Market Course which is open for the public from all levels. Since the beginning of 2007, these activities offers 3 class programs, which are: Basic class for beginners who only have basic knowledge about capital market investment, Intermediate class for those who have joined Basic class and are interested in learning more, and Advance class for investors who are interested in learning about derivatives products and bonds. It is expected that this educational program can help public to know better about the capital market investment, and to arouse public’s interest as potential investors to invest in the Indonesian Capital Market.
In cooperation with University of Indonesia, KSEI together with other SROs officially launched The Indonesia Capital Market Institute (TICMI) on December 22, 2010. The educational program, that was started to run on February 2011, is expected to generate competent capital market players for developing the Indonesian Capital Market.
Corporate Social Responsibility Program
Since its establishment in 1997, KSEI has conducted the Corporate Social Responsibility (CSR) program by providing assistance to third parties in different kinds of activities such as: financial support for construction of school's or mosques, education fund aid, mass circumcision, and donation for orphans and the elderly, also financial support for teacher professionalism improvement program for early childhood (PAUD).
Together with the SROs and other capital market participants, KSEI keeps conducting a series of charity events such as reforestation and the outreach program, which is about the importance of forest and environment preservation in the upstream area of Ciliwung river; the construction of pure water and sanitary facilities in Cibunian village - Bogor. Additionally KSEI provides education books for the capital market library in Muara Angke, Babelan - Bekasi and also financial support for the construction of education facility in Bekasi.
Existing for more than a decade in the Indonesian capital market, with its accomplishment in transforming transaction settlements into scripless and other breakthroughs that contribute to the efficiency of transaction settlements, KSEI shall keep moving forward to provide excellent services to its users as well as to carry on a number of continuous developments in the Indonesian capital market.