Indonesia to Loosen KYC Rule for Capital Market Investors

TEMPO.CO, Jakarta – Indonesia's Financial Services Authority (OJK) this week will issue a regulation on Know Your Customer (KYC), a process used by businesses to verify the identity of their clients, for potential investors in the capital market. "The goal is to simplify the procedures to invest," said OJK chief executive for capital market supervisory Nurhaida last week.

The rule will simplify a number of procedures for prospective investors planning to invest in the stock market, such as the necessity of putting their signatures immediately upon opening an account. In addition, the due diligence process will be able to be done at a later date, not on the day of the account opening.

The policy, said Nurhaida, is in line with OJK's efforts to increase the number of investors in the capital market.

As to improve trading quality, the OJK has minimized the number of shares in traded lots. Before, each lot has 500 shares, but the number was brought down to just 100 shares per lot.

First Asia Capital analyst David N. Sutyanto said that simplifying investment procedures must be done in ways that will not preclude the application of the precautionary principles. "Money laundering must be prevented, one way is by ensuring that brokers know that their customers are real people, not fictitious characters," he said.

Earlier, OJK's capital market IIA chief Fahri Ilmi said that the authority will categorize accounts into three—based on their nominal amounts; simple, standard, and advanced. In the revision of the KYC rule, a capital market investor's account opening process can also be done by banks.

In August, the Indonesia Stock Exchange (IDX) submitted the revised regulation to the OJK.

FAIZ NASRILLAH | DINI PRAMITA | RR. ARIYANI