Hollistically, business services can be devided as follows:

Futures contract which is traded at exchange multilaterally

Index & Cross Currency contracts which are traded at off-exchange through Alternative Trading System (ATS), rendered bilaterally through margining system

In details, these services can be depicted, as follows:

Futures contract, which has been matched at exchange and Over The Counter Derivatives (OTC-D) contract which has been matched off-exchange are sent electronically to Clearing House. As the contracts received by Clearing House system, verification on the completeness of Futures and Derivatives contracts data such as code of Clearing Member, code of Exchange Member Non Clearing Member, code of client, product, month, lot and price. The verification conducted by Clearing House system also encapsulates the Clearing Member’s position whether it acts as a seller or buyer.

The Clearing House shall act as a novator or substitute for futures/derivatives contract transaction (substitution of counterparty) registered by a Buying and Selling Clearing Members. Through the novation process, the Clearing House shall guarantee right and obligation of a Buying Clearing Member to every Selling Clearing Member and shall guarantee right and obligation of a Selling Clearing Member to every Buying Clearing Member.

For every open position contract registered, the Clearing House shall conduct the calculation of gains and losses of such contract based on the settlement price determined by Exchange.

Principally there are 4 (four) types of settlement which can be conducted to close out position, as follows:

• Settlement of Contracts by Offsetting.
• Settlement of Contract by Exchange of Futures for Physicals.
• Settlement of Contract by Physical Delivery.
• Settlement of Contract by Cash (Cash Settlement).

For settlement contract by Physical Delivery, the Clearing House shall allocate randomly to the Buying Clearing Member through its clearing system after a submittance of delivery notice by the Selling Clearing Member to Clearing House.

Reconciliation of balance account of each Clearing Member with Depository Bank is rendered by the Clearing House daily and monthly. Monthly and others services fees which is managed under unsegregated account shall be reconciled once in a month. Reconciliation for acceptance and payment of margins as well as the calculation of security deposit and clearing fund shall be managed under segregated account and reconciled daily. The reconciliation is proceeded through a comparison between reports resulted from the systems of Depository Bank and Automated Clearing System ( ACES) of the Clearing House.

In the morning before the trading hour is commenced, the Clearing House shall provide information on the position (buying /selling) and financial report of each Clearing Member.

If the financial position of a Clearing Member shows a cash shortage, the Clearing Member must settle its payment obligation to the Clearing House at the same day by the latest before the commencement of trading hours, by means determined by the Clearing House. If the financial position of the Clearing Member shows a cash excess, the Clearing Member may withdraw its excessive fund by filing a letter of application before hand.

The Clearing House has the power to offset every amount of money borne as the Clearing Member’s obligation to the Clearing House with an equal amount, borne by the Clearing House’s obligation to its Clearing Member.

In guaranteeing and managing the risks, the Clearing House applies several tools, as follows:

• Clearing Member Financial Condition Guidance and Surveillance.
• Margining Collection and Management.
• Marked to Market.
• Clearing Member Fund Segregation at Segregated Account
• Clearing Fund.
• Default Management.

Other than cash, IDCH also accepts initial margin payment in the form of time deposit or others forms determined by Clearing House from time to time for the currency of Indonesian Rupiah and US Dollar. The aim is to facilitate the futures and derivatives transactions. This collateral is managed by the Clearing House with the report is informed to the Clearing Member periodically.

The Clearing House provides the system for each of its Clearing Member namely The Automated Clearing System-Member (ACES-M) which is utilized by Clearing Member to communicate with the systems of Clearing House.