Legality of Investment Manager Business Activities

Legality of Investment Manager Business Activities

Question:

Permission to ask, can you please explain what an investment manager is? What licenses should an investment manager company have? Why is running an investment manager business considered attractive? Thank you for the opportunity (Agnes, South Jakarta)

Answer: It is good to know about the investment manager’s business activities, the first legal basis we need to look at is Law Number 8 of 1995 concerning the Capital Market (“ Capital Market Law “). Whereas based on the Capital Market Law it is explained that:

“Investment Manager is a Party whose business activities are to manage Securities Portfolios for customers or manage collective investment portfolios for a group of customers, except for insurance companies, pension funds, and banks which carry out their own business activities based on the prevailing laws and regulations.”

So that is easy, an investment manager is the party who manages the Securities Portfolio or Collective Investment Portfolio for its customers, but does not include insurance companies, pension funds, and banks. In practice this investment manager has duties including:

1. Manage customer assets / funds;
2. Deciding which investment instrument to use;
3. Determine the time to sell investment instruments;
4. Provide reports on the condition of customer assets / funds.

Furthermore, talking about licensing from investment managers, the first thing we need to explain is the Standard Business Field Classification (“ KBLI “) Is the most appropriate. In short, KBLI is a form of reference classification used to classify economic activities / activities carried out by Indonesian business actors into several business fields / business fields. KBLI itself is regulated in the Regulation of the Head of the Central Statistics Agency Number 19 of 2017 (“ Perkabps KBLI ”), Which stipulates that the investment manager’s business activities are included in KBLI as follows: 66123-INVESTMENT MANAGER This group includes the business activities of parties that manage securities portfolios for customers or manage collective investment portfolios for a group of customers, except for insurance companies, pension funds, and banks which carry out their own business activities based on the prevailing laws and regulations. Then in addition to having the appropriate KBLI, then the company must obtain a business license as an investment manager from the Financial Services Authority (“ OJK “). Following are some of the OJK Regulations (“ POJK ”) Which is the basis for specific rules regarding investment manager business activities:

1. Financial Services Authority Regulation Number 31 / POJK.04 / 2018 concerning Licensing of Investment Manager Representatives;
2. Financial Services Authority Regulation Number 10 / POJK.04 / 2018 concerning Implementation of Investment Manager Governance;
3. Financial Services Authority Circular Letter Number 2 / SEOJK.04 / 2020 concerning the Fit and Proper Test for Prospective Main Party Investment Managers and Investment Advisors;
4. Etc

One of the things that makes investment managers attractive is the amount of funds or assets currently being managed by the investment manager business actor. Based on data provided by the OJK in February 2020, the total total funds or assets managed by the 3 largest investment manager business actors in Indonesia reached more than IDR 134.5 trillion. Therefore, many other business actors wish to do the same thing as investment managers but do not have the appropriate permits. As a result, the customers of these business actors will clearly suffer losses. That is all we can say, if there are still things you want to ask, please contact DOCUMENTA Customer Service immediately so that we can immediately contact our experts. Answer: It is good to know about the investment manager’s business activities, the first legal basis we need to look at is Law Number 8 of 1995 concerning the Capital Market (“Capital Market Law “). Whereas based on the Capital Market Law it is explained that:
“Investment Manager is a Party whose business activities are to manage Securities Portfolios for customers or manage collective investment portfolios for a group of customers, except for insurance companies, pension funds, and banks which carry out their own business activities based on the prevailing laws and regulations.”
So that is easy, an investment manager is the party who manages the Securities Portfolio or Collective Investment Portfolio for its customers, but does not include insurance companies, pension funds, and banks. In practice this investment manager has duties including:

1. Manage customer assets / funds;
2. Deciding which investment instrument to use;
3. Determine the time to sell investment instruments;
4. Provide reports on the condition of customer assets / funds.

Furthermore, talking about licensing from investment managers, the first thing we need to explain is the Standard Business Field Classification (“ KBLI “) Is the most appropriate. In short, KBLI is a form of reference classification used to classify economic activities / activities carried out by Indonesian business actors into several business fields / business fields. KBLI itself is regulated in the Regulation of the Head of the Central Statistics Agency Number 19 of 2017 (“ Perkabps KBLI ”), Which stipulates that the investment manager’s business activities are included in KBLI as follows:

66123-INVESTMENT MANAGER This group includes the business activities of parties that manage securities portfolios for customers or manage collective investment portfolios for a group of customers, except for insurance companies, pension funds, and banks which carry out their own business activities based on the prevailing laws and regulations.

Then in addition to having the appropriate KBLI, then the company must obtain a business license as an investment manager from the Financial Services Authority (“ OJK “). Following are some of the OJK Regulations (“ POJK ”) Which is the basis for specific rules regarding investment manager business activities:

1. Financial Services Authority Regulation Number 31 / POJK.04 / 2018 concerning Licensing of Investment Manager Representatives;
2. Financial Services Authority Regulation Number 10 / POJK.04 / 2018 concerning Implementation of Investment Manager Governance;
3. Financial Services Authority Circular Letter Number 2 / SEOJK.04 / 2020 concerning the Fit and Proper Test for Prospective Main Party Investment Managers and Investment Advisors;
4. Etc

One of the things that makes investment managers attractive is the amount of funds or assets currently being managed by the investment manager business actor. Based on data provided by the OJK in February 2020, the total total funds or assets managed by the 3 largest investment manager business actors in Indonesia reached more than IDR 134.5 trillion. Therefore, many other business actors wish to do the same thing as investment managers but do not have the appropriate permits. As a result, the customers of these business actors will clearly suffer losses. That is all we can say, if there are still things you want to ask, please contact DOCUMENTA Customer Service immediately so that we can immediately contact our experts.