Securities finance industry news | Indonesia’s IDClear launches Bilateral Securities Lending and Borrowing facility

The Indonesia Clearing and Guarantee Corporation (IDClear) has launched a Bilateral Securities Lending and Borrowing (SLB) service for the Indonesian capital market.

The Bilateral SLB facility will complement the firm’s existing SLB facility — a negotiated transaction mechanism based on an agreement between the lender and the borrower, which is then managed through the Bilateral SLB scheme.

IDClear, the clearing house for exchange and non-exchange transactions for the Indonesian capital market, indicates that the new facility will provide greater flexibility and choice to lenders and borrowers for example in terms of the fee amount, collateral value and securities returned, in addition to loan period, type of loan and collateral.

With the Bilateral SLB facility, securities lending and borrowing transactions will be “increasingly regular and fair”, according to the clearing house. This will enable market participants to optimise all securities that are eligible for transaction through the Bilateral SLB facility.

The soft launch of the facility was announced at the Indonesian Stock Exchange during a seminar in which audience members heard from Jason Wells, chairman of the Pan Asia Securities Lending Association (PASLA).

Speaking on the launch of the facility, Wells says: “The introduction of an onshore bilateral SLB facility will make it easier for investors to engage in transparent, well-regulated and covered short selling activities in Indonesia, increasing the liquidity and efficiency of the country’s capital markets.

“We believe it will enable better price discovery and greater market resilience, especially during periods of heightened volatility.”

This development comes at a time when Indonesia’s initial public offering (IPO) market ranks as the world’s fourth largest, year-to-date, according to Wells. This is due to the country’s robust growth prospects and importance in supply chains for the global energy transition.

Wells continues: “Global investors are looking to increase their participation in the Indonesian market. This trend will be accelerated with regulatory changes like the introduction of bilateral SLB which aligns with international best practices.

“PASLA will continue to work with the Indonesian authorities to help facilitate the development of securities lending and the broader equity market.”