KSEI in Brief
KSEI as Securities Depository & Settlement Institution
PT Kustodian Sentral Efek Indonesia (KSEI) is a Securities Depository and Settlement Institution (LPP) in Indonesia Capital Market that was established in Jakarta on December 23, 1997 and obtained its operational license on November 11, 1998. In Indonesia Capital Market structure, KSEI is one of the Self-Regulatory Organizations (SROs), in addition to the Stock Exchange and Clearing & Guarantee Institution. KSEI, pursuant to the provisions under Law Number 8 Year 1995 regarding Capital Market, takes its role as LPP in Indonesia Capital Market by providing orderly, fair and efficient Securities Central Depository and Transaction settlement services.
KSEI started its operational activities, which is transaction settlement of Securities in script form, on January 9, 1998 by taking over the function of its kind from PT Kliring Deposit Efek Indonesia (KDEI), which once was the Clearing Depository and Settlement Institution (LKPP). Thereafter, as of July 17, 2000, KSEI, together with PT Bursa Efek Indonesia (d/h PT Bursa Efek Jakarta) and PT Kliring Penjaminan Efek Indonesia (KPEI) made a breakthrough by implementing scripless trading and central depository activities in Indonesia capital market. KSEI shares are owned by its service users, namely: the SROs (PT Bursa Efek Indonesia and PT Kliring Penjaminan Efek Indonesia), Custodian Bank, Securities Companies, and Registrars.
KSEI Service Products
In accordance with its function, KSEI provides service products comprising of electronic Securities depository, Securities Account administration, Securities transaction settlement, distribution of corporate action proceeds, and other relevant services such as: Post Trade Processing (PTP) and central depository service reports.
In performing its daily operational activities, KSEI keeps providing excellent services to the service users. To assure transaction security and investors’ contentment in making transaction in the capital market, all KSEI’s activities are operated through Securities depository and transaction settlement system by means of high-technology book-entry, namely C-BEST (The Central Depository and Book Entry Settlement System. This system is an integrated electronic platform that supports Securities transaction settlement by book-entry in Indonesia capital market. As of June, 2002, KSEI had completed the conversion program of the overall stocks listed on the Stock Exchange, from script form into scripless.
Currently, KSEI has performed depository of various Securities types, such as: Stocks, Warrants, Exchange Traded Fund, Participation Unit of Limited Participation Mutual Fund, Corporate Bonds, Government Bonds, Sukuks, Sertifikat Bank Indonesia, Surat Berharga Syariah Negara, Medium Term Notes, Promissory Notes and Assets Backed Securities. Those Securities are actively recorded in C-BEST system.
As of September 13, 2001, KSEI has provided a back-up system called Disaster Recovery Center (DRC) to protect the operational continuity of its service products. Located in a site separated from the primary system, DRC system will secure the Central Securities Depository services during an emergency (disaster) condition or disturbance. This back-up system has a capacity and work process identical to those of the primary system enabling both systems to automatically replace one another when either one is collided with disruption. To make sure the back-up system can function well, KSEI always perform procedure testing periodically through DRC Live Test 2 (twice) a year.
To facilitate communication between KSEI and Account Holders, Private Network Provider, the combination of velocity and security factors, is applied. As of October 6, 2009, Account Holders can use 2 (two) network providers, namely PT Pasifik Satelit Nusantara dan PT First Media Tbk., for accesing C-BEST. Account Holders can choose one of the Private Network Providers to become the data network provider that linked to KSEI. It is expected that the two Private Network Providers can improve the data network quality, performance, and security of KSEI Service Users.
In line with the increasing number of Securities managed in KSEI’s system and considering this extremely-high-risk security level, KSEI has invited independent party to examine the IT Security. Referring to the recommendation of such independent party, KSEI has started to perform revitalization of IT Security to protect network system from outer threat as well as to keep providing comfort to its service users.
In line with C-BEST development efforts to provide excellent services to all service users in order to cope with the international standard related data format and communication network, KSEI has officially become active member of The Society for Worldwide Interbank Financial Telecommunication (SWIFT) as of September 6, 2008. As one of supporting communication platforms for C-BEST, activation of SWIFT network enables KSEI to communicate with Account Holders of SWIFT users. Finally, information from KSEI to its service users can be delivered more easily to global investors that have linked to SWIFT, or vice versa, instruction coming from investors to service users can be easily processed and forwarded to C-BEST.
Meanwhile, to improve efficiency in daily activities of KSEI Account Holders, development has been made on C-BEST facility, Straight Through Processing (STP) Interface, enabling C-BEST to have host to host connection with back office system of KSEI Account Holders. This facility is expected not only to support the application of international standard format like SWIFT, XML Message, etc., but also to replace the semi-manual activities currently performed by Account Holders through upload and download file processes.
As part of the company asset protection effort, KSEI has already developed an effective and continual risk management system called Enterprise Risk Management (ERM). This ERM approach has enables company to identifiy and manage risk comprehensively so it can minimize the corporate risks, e.g.: strategic risk, compliance risk, financial risk and operating risk, and help the corporate objective achievement. In order to improve the continual risk management process, in the beginning of year 2010 KSEI has conducted the Policy Integration Program of Business Continuity Plan (BCP) with Risk Management Policy. Through this program, the risk management will be more compherensive and integrated in order to protect the company assets and ascertain the company’s business performance.