In July 2022, the Board of Governors of Bank Indonesia issued new regulations on domestic non-deliverable forward (NDF) transactions (New Regulations).1 The New Regulations create a comprehensive framework, which govern domestic NDF transactions.
The New Regulations require that a domestic NDF transaction must be based on a contract that requires a written confirmation on the completion of the transaction. Another requirement is that domestic NDF transactions exceeding a certain value, must be based on specific underlying transactions, listed in the New Regulations.
The New Regulations also rule that the nominal value and term of each domestic NDF transaction must not exceed the nominal value and term of its underlying transaction. While the New Regulations allow domestic NDF transactions to be extended or terminated, they cannot be settled earlier.
Parties to a foreign exchange domestic NDF transaction must submit the relevant underlying transaction documents and/or other supporting documents to the relevant banks.
1 Members of Board of Governors Regulation No. 24/11/PADG/2022 on Domestic Non-Deliverable Forward Transactions.
