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1998 Annual Report:
Settlement Institution In order to implement the scripless trading and book-entry settlement, Bapepam issued business licenses for PT Kliring dan Penjaminan Efek Indonesia (PT KPEI) in June 1998 and for PT Kustodian Sentral Efek Indonesia (PT KSEI) in November 1998. With such licenses, PT KPEI and PT KSEI would be able to fully carry out their functions. Several important events that occured in 1998 were the replacement of PT KSEI Directors and the appointment of a vendor to prepare international standards Central Custodian System which had been selected by Clearing Guarantee Corporation-Central Securities Depositary Team with the assistance of independent consultant. The new PT KSEI management has arranged a work-plan program for the implementation of scripless trading and book-entry settlement in the year 2000. To guarantee the preparation of Central Custodian Service and safe settlement of transactions , in June 1998 Bapepam issued rules regarding Internal Controls and Administrative Procedures for the Central Securities Depository. The rules stipulate that the Central Securities Depository must engage an independent auditor that has international experience and reputation in analysing internal control system, to evaluate, and report on the effectiveness of internal control System of Central Securities Depository. This rule also establishes coordination between the Central Securities Depositary and the issuers or Securities Administration Agencies regarding Securities Account Balances and Securities Account holders in Collective Custody. The rules also authorizes Securities Account holders to appoint an auditor to examine their securities account balances in Collective Custodian. In accordance with Law No.8 of 1995, Bapepam has worked together with the Indonesian Central Bank on a study regarding restrictions on the authority of Custodian Banks. The study would be used to discover a basis for drafting rules to enable Custodian Banks and Securities Companies to work together on the management of capital market products.
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