To buy or sell corporate bonds, investors should contact a broker who will organize the purchase or sale on their behalf, either over-the counter (OTC) or on the stock exchange.

Bonds in Indonesia are traded in the Indonesia Stock Exchange (IDX).  While bond trading on the stock exchanges is fairly common, most corporate bond transactions are done OTC, using the IDX Over-the-Counter Fixed-Income-Service (OTC-FIS) facility.

OTC-FIS is an electronic facility for bond trading that displays bid and offer quotations on a real-time basis. Only custodian banks and securities companies registered with the SSX (collectively known as participants) can conduct corporate bond transactions through OTC-FIS. Participants quote, negotiate, and report bond transactions to OTC-FIS. Non-participants can also access the facility, but only to access real-time information on bonds trading.

An investor interested in investing in bonds first opens a trading account with a custodian bank or securities company. Investors then place a bid or offer through broker-dealers, who in turn place real-time bids or offers into the OTC-FIS facility.

Other participants interested in the quotation then contact the counterparty to negotiate. Once an agreement is reached, the deal confirmation is delivered via OTC-FIS before the end of the bourse day.

IDX hours are as follows (local time):

Monday to Thursday

• First Session:  9:30 am to 12:00 pm
• Second Session: 1:30 pm to 5:00 pm

Friday

• First Session:  9:30 am to 11:30 am
• Second Session: 2:00 pm to 5:00 pm

OTC bond transactions can also be done without involving the stock exchanges. Prices, payment, settlement, and other information pertinent to the transaction are determined between sellers and buyers. Only the ownership transfer is registered with the central registry.

Transferring Securities

Bond exchange transactions are settled either by book entry (in case of scripless bonds), or by physical delivery through custodian banks (in case of scrip-based corporate bonds).

For scripless corporate bonds traded on the stock exchanges, Indonesia's central custodian, Kustodian Sentral Efek Indonesia (KSEI), carries out exchange via a book entry settlement system in coordination with the clearing guarantee corporation, Kliring Penjaminan Efek Indonesia (KPEI), and the stock exchange. Trade confirmation must enter OTC-FIS before the end of the bourse day.

For corporate bonds not traded on the stock exchanges, settlement may be carried out between the counterparties through re-registration.

The settlement period is agreed to by the counterparties, but is usually T+3.

Investors collect interest or redemption payments through the central securities depository for corporate bonds Kustodian Sentral Efek Indonesia (KSEI), or through custodian banks. On interest payment dates and redemption dates, these institutions arrange for the designated settlement account of the bondholders to be credited with the relevant payments.

All payments of principal and interest on bonds are credited through the investment accounts where the bonds are held.