The Financial Services Authority (Otoritas Jasa Keuangan or OJK) has finally unveiled the much-anticipated implementing regulation for the new chapter of financial conglomeration. OJK Regulation No. 30 of 2024 on Financial Conglomeration and Financial Holding Company governs the establishment or appointment of a financial holding company (perusahaan induk konglomerasi keuangan or PIKK) – a legal entity tasked with controlling, consolidating and overseeing all of the financial conglomerate’s activities. This regulation was promulgated and became effective on 23 December 2024.

This is the fourth in a series of client alerts in relation to Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“P2SK Law”), dated 12 January 2023. Aside from asserting the provisions that have been stipulated by the Financial Service Authority, the P2SK Law sets out several new provisions that open a new chapter in the financial conglomeration and consolidation. The P2SK Law now requires financial conglomerates to establish or appoint a financial holding company, a legal entity that is expected to control, consolidate and be responsible for all of the financial conglomerate’s activities. The P2SK Law also affirms OJK’s authority to give written orders to financial services companies to push for financial consolidation.

The P2SK Law introduces the concept of financial instrument managers and trust fund managers. Both are designed as specific purpose entities licensed by Otoritas Jasa Keuangan and established to perform asset securitization and/or trustee fund management activities. The government expects the existence of SPVs to contribute to financial instrument diversification. Trustees, on the other hand, are regulated with the aim of increasing participation by financial market players and bringing about improvement in disclosure and good corporate governance regulations.

On 15 December 2022, the House of Representatives passed the draft omnibus law on the financial sector which is referred to as the “Financial Sector Development and Reinforcement (Pengembangan dan Penguatan Sektor Keuangan) Law” (“P2SK Law”). The draft law is currently under an enactment process with its effective date to be further announced. The P2SK Law, among other things, stipulates the reconfiguration of supervisory powers among the different regulators over a number of sectors (including the financial technology and digital financial assets sectors) that had been overlapping and led to regulatory gaps.