Canada    FinTech Guide    Chapter 3    Indonesia

3. Consulting and Broking Services / Robo-Advisory / Auto-Trading
Indonesia  Indonesia

Considering the low-risk factor of mutual funds and the eagerness of Indonesian citizens in big cities to make investments, it is expected that the business of modern consulting and broker services may expand in the future. Furthermore following the issuance of the recent BI Regulations on Fintech near the end of 2017, it indicates that the regulator is starting to allow the growth of financial technology in consulting and broking services through some assessment and certain procedures (as explained in “Legal affairs” section).

Legal Affairs

Under the BI Regulations on Fintech, any financial technology operator that fulfills the category as “Financial Technology” shall be required to have itself registered to BI pursuant to BI Regulations on Financial Technology. The activity of financial technology operator includes, among others, the market support. Furthermore it was mentioned under BI Regulations on Fintech the example of financial technology in the form of market support shall be the technology financial which facilitates the granting of information that faster and cheaper relating to product and/or financial service to the society. The example includes data the provision of comparison data on products of financial service institution.

Although by initial analysis the activities of Robo advisory services or Auto-Trading described in this section may fall within the scope of criteria under the BI Regulations on Fintech, it is important to seek further clarification from BI to have firmer position for the relevant business players. However by considering the procedures as stated in BI Regulations on Fintech and should the business player deems its business model can be considered as “Financial Technology”, it is possible for them to firstly register to BI as financial technology operator and follow the determined procedures i.e. registration and Regulatory Sandbox. Nonetheless, the fintech that conducts comparison activity as described in this section may be fit with the examples provided in the BI Regulations on Fintech.

Following the end of Regulatory Sandbox period, BI will determine the trial result, and it is found that the product, service, technology and/or business model constitutes as financial technology other than payment system category, then BI will submit the trial result to the relevant authority (e.g. OJK), then the licensing process will follow the rules of other relevant authority.

Please see detailed explanation on Part “1. Payment Service / Mobile Payment”, particularly on “Legal Affairs” part.

If it is seen by the regulator that the operator wants to provide consulting and broking services for investments in Indonesia, it needs to be made in the form of securities company and apply for license as a broker.

A securities company which conducts activities as a broker may handle a securities transaction for its own interest and/or other parties and may assist the securities marketing for the interest of another securities company.

A securities company may be established specifically to trade the mutual fund products. This type of securities company will be exempted by limitation or obligation fulfilment vested to the usual broker company.

Economic Conditions

In general, the market for consulting and adjacent services is relatively high, considering the number of Indonesian people has reached more than 250 million people and the high awareness of investment in some big cities in Indonesia. One of the biggest players in this business is Bareksa, being the first securities company that obtained a license to conduct this business.

We also found fintechs that administer the proper license to provide brokerage ac-tivity specifically for mutual funds i.e. license as Seller Agent of Mutual Fund Securities. Name of the relevant fintechs include Bareksa, IPOTFund and Xdana Investa.

Furthermore, we note there are some fintech companies that collect and offers capital market products information, provide comparison diagram, data or analysis on the company or capital market products to help the investor with his decision-making, such as Stockbit.

Contributing Authors

Armand Yapsunto Muharamsyah & Partners (AYMP)

Arie Armand
Jakarta, Indonesia

Richard Yapsunto
Jakarta, Indonesia

Search by:

Chapter Index:

1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018