The Financial Services Authority (“OJK”) has faced criticism by stakeholders and the public in the wake of a spate of recent financial scandals involving capital-market participants and products. In response, the OJK has issued regulation No. 23/POJK.04/2021 on Further Measures for Capital-market Supervision (“Reg. 23”),[1] which entered into effect on 3 December 2021.

All capital market participants and stakeholders, including the self-regulating capital-market organizations, are subject to Reg. 23, which aims to provide greater legal certainty as regards OJK’s supervisory actions.

This article highlights and analyses some of the key provisions of Reg. 23.

A. Capital-Market Supervision

The OJK is provided with extensive supervisory authority by Law No. 21 of 2011 on the Financial Services Authority (the “OJK Law”).[2] However, while its supervisory powers are wide-ranging, there has been a lack of a clear framework that would allow the OJK to fulfil its supervisory role effectively. Reg. 23 aims to plug that gap.  

Reg. 23 provides for, among other things, the following supervisory measures:

1. offsite supervision;

2. technical inspection;

3. inspection of compliance; and/or

4. other supervisory measures.

B. Responsibilities of Capital-Market Participants

Reg. 23 also affirms that a wide range of capital-market participants, including securities companies, and other interested parties (company directors, commissioners, shareholders, controlling shareholders, or controllers of these parties), must abide by the prevailing capital-market regulations, and must carry out their activities in accordance with the following principles:

1. integrity;

2. good faith;

3. prudence, through the application of risk management and good governance;

4. professionalism; and

5. provision of access to information.

C. Sanctions for Non-compliance

Reg. 23 establishes that those who infringe the prevailing regulations or the principles referred to in part B above may be liable to the following sanctions:

1. issuance of an Order for Specific Measures (“OSM”);

2. issuance of a Written Order (“WO”); and/or

3. law enforcement measures.

An OSM is the OJK’s first response to breaches by capital-market participants. However, if considered necessary by a supervisor,[3] the OJK may issue a WO or implement law enforcement measures without first issuing an OSM.

As an example, the OJK may issue an OSM to require (i) adjustments, compliance, or improvements in accordance with the provisions of the applicable regulations or (ii) the replacement of a director, commissioner, shareholder, controlling shareholder, or controller of a capital-market participant. An OSM may be issued upon consideration of:

  1. the extent of the material non-conformity or violation;
  2. the frequency of the non-compliance or violations;
  3. the impact on business continuity or obligations that must be settled;
  4. impact on the capital markets or financial services industry; and/or
  5. such other matters as may be determined by the OJK.

Failure to comply with an OSM may leave a non-compliant party liable to:  (i) inspection under Article 100 of the Capital Markets Law; or (ii) the issuance of a WO by OJK.

The characteristics of an OSM and WO (collectively, “Orders”) are essentially quite similar. They both contain the same type of instruction: A WO would normally be issued after a non-compliant party failed to heed an OSM, while a WO may be issued without the need for a prior OSM, if considered necessary by a supervisor.

The essential differences between the two Orders may be summarized as follows:




Issuance format

Reg. 23 stipulates two forms of issuance for an OSM:

  1. in writing to a non-compliant party; or
  2. in the event of: (i) the order having significant impact on the operations or business activities of the non-compliant party; (ii) the order impacting consumer services provided  by the non-compliant party; or (iii) other circumstances, in which the OJK may publish a warning on the OJK website

Issued in writing to a non-compliant party in the event that the party fails to adhere to an OSM.


Reg. 23 stipulates that OJK may issue an OSM of specified duration, which may be extended.

A statutory time limit on duration is not stipulated.   

Both Reg. 23 and the OJK Law are silent on the period of effectiveness of a WO.

Response from Non-compliant Party

Within 5 working days of issuance of an OSM, the non-compliant party is required to submit:

  1. an action plan to resolve the relevant issues; and
  2. a statement of commitment to resolve the issues by:
    1. the parties identified in an  OSM;
    2. directors, commissioners, or management; or
    3. shareholders, controlling shareholders or controllers, if it involves their responsibilities.    

If a non-compliant party has not fully complied with an OSM by its expiry date, they must submit:

  1. a progress report on implementation of its action plan;
  2. an application for extension of the OSM 

within 5  working days of expiry.  

Both Reg. 23 and the OJK Law are silent as to timelines and the specific responses that must be made by a non-compliant party upon being served a Written Order.


Failure to comply with an OSM may give rise to:

  1. an inspection under Article 100 of the Capital Markets Law; and/or
  2. Issuance of a WO

Failure to comply with a WO may result in a formal OJK investigation, which could entail criminal liability.

The nuts and bolts of the Orders will be spelled out more fully in further OJK regulations, which have yet to be issued.