INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Monic N. Devina, D. Meitiara P. Bakrie and Ruth A. Mendrofa, ABNR Counsellors at Law
6.8 Market Integrity Principles The fundamental principles of Indonesian capital market laws and regulations are:
A securities crowdfunding platform provider may also provide a system that facilitates secondary market trading in securities that were distributed at least one year before the trade. A trade in the secondary market can only be conducted between investors that are registered with the platform, with no more than two trades within 12 months and a gap of six months between each trade. Although the platform operates in a similar way to a peer-to-peer trading platform, all trading (including changes of securities ownership) made through the securities crowdfunding platform must be registered with the Indone - sian Central Securities Depository (KSEI) as the agency in the Indonesian capital markets that provides organised, standardised and efficient central custodian and securities transaction set - tlement services, in compliance with the Indone - sian Capital Market Law. 6.7 Rules of Payment for Order Flow No specific regulation on payment for order flow exists in Indonesia. In general, all securities bro - kers need to execute their trade orders them - selves, and may only assign them to another broker if there is trouble in the trading system or if the stock exchange suspends them while an outstanding order needs to be executed. Fur - thermore, the securities brokers must also dis - close fees charged to customers when facilitat - ing a trade (including their fee) and fees charged by the stock exchange. A benchmark fee (or commission) that may be charged by a securities broker must be agreed and stipulated by members of the Indonesia Securities Company Association.
• disclosure; • efficiency; • fairness; and • protection of investors.
For investor protection, the Indonesian Capital Market Law stipulates two key areas of market abuse: insider trading and market manipulation. The Law stipulates that parties (which includes individuals, companies, partnerships, associa - tions or organised groups) are prohibited from: • deceiving or misleading other parties through the use of whatever means or methods; • participating in a fraud or deception against another party; • giving false statements on material facts; or • failing to disclose material facts that are necessary in order to avoid a statement being misleading. A violation of the market abuse prohibition is subject to imprisonment for up to ten years and a fine of up to IDR15 billion. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations Aside from the IDX rule on the use of the auto - mated ordering feature in a securities trading platform (see 6.5 Order Handling Rules ), high- frequency and algorithmic trading are not yet specifically regulated in Indonesia. In practice, many players already use these technologies in both securities and futures commodities trading.
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