Fully supported with high commitment from the Financial Services Authority (FSA) to perform the development, arrangement, and supervision of the Capital Market for the purpose of creating an orderly, fair, and efficient Capital Market, and protecting the interests of the investors as well as the public as stated in the Article 4 of Law Number 8 Year 1995 concerning Capital Market, the FSA’s Study Team conducted an advance research in 2007. The Study Team has recommended an establishment of Investor Protection Fund in Indonesia capital market industry by constructing a proper infrastructure, comprising of relevant rules and capital market players’ readiness.
In 2010, the Ministry of Finance has drawn up the establishment plan of such program in the 2010-2014 Capital Market and Non Bank Financial Institutions Master Plan. It is stated in the Strategy 5, Program 2 concerning the establishment of Investor Protection Fund. Realizing the importance of such investor protection fund as an investor protection scheme, the FSA shall implement it by providing legal fundamental for such establishment and the operational activities.
Several researches were conducted within the period of 2010 – 2012 in the preparation for the establishment of Investor Protection Fund. The first was conducted by IDX Team concerning the Feasibility of the Establishment of Investor Protection Fund. Afterwards, the Technical Assistant of Asian Development Bank (ADB) Number 7466 (INO), Mr. David White, recommended an establishment of a New Company as the institution for the Investor Protection Fund on September 23, 2012. Also, on September 28, 2012, a legal consultant, Hiswara Bunjamin & Tanjung, recommended certain legal aspects of Investor Protection in the Legal Consultation for the Establishment of Investor Protection Fund. Hence, the deed of establishment of PT Penyelenggara Program Perlindungan Investor Efek Indonesia (PPPIEI or ISIPF) Number 16 was drawn up by the Notary, Ashoya Ratam, as the company that administers Investor Protection Fund program. It acquired a Decision Letter from the Ministry of Law and Human Rights Number AHU-64709.AH.01.01 Year 2012 concerning Company Legal Entity on December 18, 2012.
The purposes and objectives of the establishment of Investor Protection Fund Institution are as follow:
- To administer and manage investor protection fund in Indonesia capital market.
- To make investment on investor protection fund in Indonesia capital market.
- To conduct investigation, verification, analysis in order to make payment and to conduct other necessary action in respect of claim forwarded by investor.
- To receive additional fund and or collect fee in respect of investor protection activities in Indonesia capital market.
- To take necessary action for recovery of fund withdrawn from Protection Fund of Investor Asset in order to pay a claim by subrogation on investor’s right toward the party inflicting loss, including but not limited to participation in a legal process, both in or outside the court.
- To conduct any supporting activities related to the abovementioned purposes and objectives.
In performing its duties, ISIPF has 3 principal functions as follow:
- Investment Function
- To arrange and perform investment plan on Investor Protection Fund
- To monitor the investment growth of unused amount of Investor Protection Fund
- To deposit the investment yield of Investor Protection Fund into Investor Protection Fund.
- Book-Keeping and Financial Function
- To arrange and administer the recording and book-keeping of the whole transactions of Investor Protection Fund Institution
- To arrange and administer the recording and book-keeping of the whole transactions and activities in respect of Investor Protection Fund separated from the recording and book-keeping of Investor Protection Fund Institution
- To ensure that such recording and book-keeping are well-administered and properly maintained in compliance with the applicable laws and regulations
- To arrange financial reports of Investor Protection Fund Institution based on commonly accepted accounting principles.
- To perform treasury activities, among other: to receive funds and collect fees of Investor Protection Fund and make payment for any costs related to Investor Protection Fund
- To arrange Annual Work Plan and Budget (AWPB) based on Capital Market efficiency principles
- In the case of inconsistency or difference in the recording performed by Investor Protection Fund Institution with other party, Investor Protection Fund Institution shall conduct reconciliation with concerning party to ensure the accuracy of the book-keeping.
- Audit and Compliance Function
- To ensure the compliance of applicable laws and regulations as well as standard operating procedures and code of ethics of Investor Protection Fund Institution
- To process every complaint of the Investor and the public related to the performance of Investor Protection Fund Institution responsibilities, and
- To ensure that internal audit and compliance staff has proper access to book-keeping at any time.
In performing its duties, ISIPF shall:
- Make separate safekeeping, recording and book-keeping between assets of Investor Protection Fund Institution and Investor Protection Fund
- Keep Securities for the investment of Investor Protection Fund as stated in the FSA Rule Number VI.A.4 concerning Investor Protection Fund in Custodian Bank
- Deposit fund of Investor Protection Fund in bank account and/or depository separated from operational account and/or fund depository of Investor Protection Fund Institution
- Arrange and submit report comprising of monthly activities and financial reports, semi-annual financial reports, and annual financial reports of Investor Protection Fund to the FSA, and
- Provide a secure safekeeping site for the assets of Investor Protection Fund
ISIPF has several authorities related to the following matters:
- To represent Investor Protection Fund in and outside the court
- To make investment on Investor Protection Fund in compliance with the FSA Rule Number VI.A.4 concerning Investor Protection Fund for the purpose of optimally improving the value of Investor Protection Fund by considering the investment yield and risk
- To collect fee from members of Investor Protection Fund as stipulated in the FSA Rule Number VI.A.4 concerning Investor Protection Fund
- To represent Investor Protection Fund in order to pay reimbursement or refund of Investor Protection Fund having been paid to the Investor from the Custodian which causes the loss of such Investor asset
- To receive and deposit the following funds into asset of Investor Protection Fund
- Fund received by Investor Protection Fund from the Custodian as refund for the Investor for the performance of subrogation right
- Investment yield and/or
- Fund and/or asset from other sources determined by the FSA
- To pay any costs related to the activities of Investor Protection Fund
- To set up the requirements, procedures, or technical guidances concerning membership, claim handling, and investment policy of Investor Protection Fund, and other matters related to the duties of Investor Protection Fund Institution, provided that such requirements, procedures, or technical instructions and amendments thereof shall apply after obtaining the approval from the FSA
- To give suggestion to the FSA concerning the number of maximum claim for each Investor and/or total Investor in 1 (one) Custodian by considering any recommendation from the claim committee
- To perform investigation, verification, and analysis before deciding to accept or refuse claim payment of Investor
- To appoint third party to give assistance in the investigation and verification process of Investor claim
- To require the Custodian and Investor to provide Power of Attorney in order to obtain necessary information and document for verification of Investor claim in compliance with the secrecy provisions as stipulated in the applicable laws and regulations
- To make payment and perform other action related to Investor claim which has been declared legitimate for payment, and
- To give input to the FSA concerning protection stages, membership, and protection coverage based on the capability of Investor Protection Fund by taking into consideration the capability and the need of Investor Protection Fund
