Indonesia to start trading bond futures in Q1 2016, tighten rules on foreign venture capital

Men looking at a screen during a stocks expo at the Indonesia Stock Exchange in Jakarta.
Men looking at a screen during a stocks expo at the Indonesia Stock Exchange in Jakarta. PHOTO: AFP

JAKARTA (REUTERS) - Indonesia will start trading bond futures as early as the first quarter of 2016 and introduce new rules for foreign venture capitals, officials at the Financial Services Authority (OJK) said on Wednesday.

The Indonesia Stock Exchange will launch trading in futures contracts for sovereign rupiah-denominated bonds first as it seek to expand the derivatives market for corporate bonds and deepen the country's financial markets, OJK's deputy chief of capital market supervisor Noor Rachman told Reuters. "Indonesian government bond futures will serve for hedging purposes," he said.

OJK Chairman Muliaman D. Hadad told a news briefing earlier on Wednesday that the trading platform is expected to be ready by the first quarter next year.

The government of Southeast Asia's largest economy plans to raise 264.6 trillion rupiah (S$27.04 billion) in net bond issuance next year, according to the 2016 state budget, excluding refinancing matured bonds and cash-management treasury bills.

Outstanding tradable government bonds totaled 1,460.43 trillion rupiah as of Dec. 29, more than 38 per cent of which were owned by foreign investors.

OJK also said it wants to tighten rules for foreign venture capital firms investing in Indonesia after many put their cash into Indonesian start-ups. "There are rules for local companies, so the foreign ones must also follow the rules. We will ask foreign venture capital firms to apply for business licenses in Indonesia and if they can, to have local partners and joint ventures," said Firdaus Djaelani, OJK's non-bank financial institution chief supervisor.