PPSK Law: Capital Market

Transformation on the Indonesian Capital Market Regulation

10 March 2023

The newly introduced Law No. 4 of 2023 concerning the Development and Strengthening of the Financial Sector ("PPSK Law") result in numerous substantial changes in the Indonesian financial sectors. It amends 17 laws in the financial sector, which includes Law on the Bank of Indonesia, Law on the Financial Services Authority (“Otoritas Jasa Keuangan” or “OJK”), Insurance Law, Banking Law, Capital Market Law, Currency Law, Futures Trading Law, etc. Through PPSK Law, financial sectors will also be challenged to adapt and accommodate innovation as well as global challenges to achieve greater welfare.


PPSK law amends the Law Number 8 of 1995 on Capital Market jo. Government Regulation in Lieu of Law of Republic of Indonesia Number 1 of 2017 ("Capital Market Law"), altering some regulations notably on the transition of authority from Capital Market Regulatory Agency (“Badan Pengawas Pasar Modal” or “Bapepam”) to OJK.


This article will further discuss the amendment directly affecting the capital market, as the comparison matrix is presented below:



Capital Market Law



Definition of the Stock Exchange Members


Securities trader intermediaries who obtained a business license from Bapepam and have the right to use the stock exchange system and/ or facilities in accordance with stock exchange regulations.



a.  Securities trader intermediaries who have obtained a business license from OJK; and

b.  Other parties who obtain approval from OJK.

Shifting of Authority from Bapepam to OJK


Bapepam carry out functions in the capital market, which includes providing guidance, regulation, and supervision of the capital market activities.


Generally, Bapepam's function and authority in the capital market sector shifted to OJK. There were several additional functions in the capital market sector, including:

a. Establishing public offering requirements and procedures;

b. Establishing requirements for the use of information technology in the capital market;

c. Regulating the obligations of capital market supporting professions and trustees;

d. Arranging the implementation of securities crowd-funding using the services of electronic system operators;

e. Regulating carbon trading on carbon exchanges; and

f.Carry out international activities in the field of capital markets.


Prohibitions for investment managers


The investment manager or its affiliated parties are prohibited from receiving any compensation of any kind, whether direct or indirect, that may influence the relevant investment manager to buy or sell securities for the mutual fund.


In addition to be prohibited from receiving any compensation, investment managers are prohibited from having affiliate relationships with a custodian bank, except for affiliate relationships that occur due to ownership or participation of government capital.


Capital Market Supporting Professions


Shall comply with the code of ethics and professional standards set by the respective professional associations as long as they do not conflict with this Law and or its implementing regulations.



The capital market supporting profession as referred to is required to establish or become a partner in the capital market supporting professional office.


Expanded access to funding




In order to expand access to Micro, Small, and Medium Enterprises or MSMEs to obtain funding from the capital market, OJK regulates the collection of public funds through securities offerings using the services of electronic system providers (securities crowdfunding).


Public offering


The registration statement becomes effective on the 45th day from the receipt of the complete registration statement or on an earlier date if declared effective by Bapepam.


The registration statement becomes effective on the 20th business day from the receipt of the complete registration statement or on an earlier date if declared effective by OJK.






In the event of liquidation of an issuer or public company, the position of the public shareholder is one level below that of the concurrent creditor and in the event that there is a division of the remaining liquidated assets.


Fraud, Market Manipulation, and Insider Trading


In the course of securities trading activities, each party is prohibited directly or indirectly:

a.       Deceive the other party by using any means;

b.       Participate in deceiving others; and

c.       Make any misrepresentation of material facts or not disclose material facts with the intent to benefit or avoid harm to oneself or the other party or for the purpose of influencing the other Party to buy or sell the securities.


In securities trading activities or investment management activities, each party is prohibited from intentionally either directly or indirectly:


1)      Deceiving by using false names, false dignity, deception, a series of lies, and/or any means, so that the other party is affected to:

a. purchase securities;

b. selling securities;

c. holding securities; and/or

d. use its services to manage investments, by handing over funds and/or securities to be managed, with the intention of benefiting oneself or other parties.


2)      Make any misrepresentations regarding material information or facts or not disclose material facts with the intention of:

a. Benefit or avoid harm to yourself or others;

b. Influence other parties to buy, sell or hold securities; and/or

c. Influence other parties to use their services to manage investments, by handing over funds and/or securities to be managed.


Una Via Principles and Written Order




Between Chapter XII and Chapter XIII, a chapter on una via principles and written order is inserted related to the authority of the OJK in carrying out the investigation in details.


Changes in criminal provisions



It should be noted that there are several changes in the regulation of criminal sanctions with the issuance of the PPSK Law.


Aside from the matrix above, PPSK Law altered more provisions in the Capital Market Law. Moving forward, the Government expects to further strengthen the coordination framework and achieve a higher level of financial system stability in Indonesia with the enactment of PPSK Law.


Following the transition, several implementing regulations will be issued to accommodate changes in the capital market sector.


Should there be any queries related to this regulation or to find out if this effects your business or personal interest, please do not hesitate to contact us.

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