Repurchase Agreement (Repo) Buyers’ Protection after the Issuance of the Regulation of the Financial Services Authority Number 09/POJK.04/2015

Abstract

This paper aims to find out the Repurchase Agreement (Repo) buyers’ protection in the capital market, after the issuance of the Regulation of the Financial Services Authority Number 09/POJK.04/2015 on the Guidelines for Financial Services Institutions Repurchase Agreement Transactions (POJK Repo). Repo transaction is initially considered as loan transaction and lending securities instrument between two parties based on an agreement. Then, on a predetermined date, the same return on securities will be given at the agreed price. However, after the issuance of the POJK Repo, the repo transaction qualifies as a sale and purchase transaction with a repurchase agreement. As a result, the initial understanding that repo is a loan and lending transaction is no longer valid. In the Global Master Indonesia Repurchase Agreement (GMRA Indonesia), the repo seller’s responsibility is unclear when the value of the securities held by the Repo Buyer Party cannot fulfill the value that must be paid by the Seller on the repurchase date. Therefore, despite the fact that Indonesia has had repo transaction guidelines, the GMRA Indonesia as mandated by the Financial Services Authority Number 9/POJK.04/2015, the responsibility of the repo Seller has not been regulated explicitly.