Featured Product

    OJK Issues LIBOR Transition Guide and Regulation on Fund Distribution

    December 24, 2021

    The Financial Services Authority of Indonesia (OJK) published a LIBOR transition guide and a Regulation (26/POJK.03/2021) on the maximum limit for fund distribution and large fund distribution for Islamic commercial banks, with the regulation coming into force on January 01, 2022. Maximum limit for distribution of funds has been defined as the maximum percentage of distribution of funds for related parties as well as for parties other than related parties. For related parties, maximum limit for distribution of funds has been set as 10% of bank's capital. For the parties other than related parties the maximum limit for distribution of funds is 25% of the core capital (tier 1) of a bank. Large fund distribution is the distribution of funds (10% or more of core capital of a bank) to individuals or groups other than related parties.

    The recently published LIBOR transition guide, from the National Working Group on Benchmark Reform, is intended for market players in Indonesia. The guide:

    • sets out information on the background to the occurrence of LIBOR discontinuity, the timeline for discontinuing LIBOR publication, the implications of the LIBOR transition, and the guidelines for preparation and recommendations for the LIBOR transition that can be used as a reference for market participants.
    • offers information on alternative benchmark rate conventions and spread adjustments that market participants can consider in drafting new financial contracts and fallback on LIBOR contracts (legacy contracts). 
    • highlights that the working group recommends market participants with LIBOR exposure to use alternative reference rates on new financial contracts while considering the appropriate alternative reference rate convention options.
    • notes that the working group recommends market participants to form a LIBOR transition team to ensure a smooth transition process, negotiate outstanding contracts with debtors or counterparties to agree on a fallback clause, use fallback clause language from market standards that apply globally, and keep abreast of developments in the LIBOR transition process.

     

    Related Links (in Indonesian)

    Effective Date: January 01, 2022 (Regulation)

    Keywords: Asia Pacific, Indonesia, Banking, Securities, LIBOR, LIBOR Transition, Interest Rate Benchmarks, Alternative Reference Rates, Regulatory Capital, Tier 1 Capital, Capital Distribution, Islamic Banking, OJK

    Featured Experts
    Related Articles
    News

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks

    May 20, 2022 WebPage Regulatory News
    News

    NGFS Report Explores Quantification of Climate Risk Differentials

    The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations

    May 19, 2022 WebPage Regulatory News
    News

    EC Publishes Results on Review of Web Accessibility Directive

    The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.

    May 19, 2022 WebPage Regulatory News
    News

    MAS Consults on Adjustment Spreads for Conversion of SOR Contracts

    The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.

    May 18, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8206