Derivative Security is a financial security whose value is derived from the value of another security (underlying asset) such as equity or debt instrument. It can derive directly from an underlying asset or from the underlying asset’s derivatives. Derivative can also be defined as a contract or agreement, which value depends on the performance of an underlying asset.

In a more specific definition, derivative is a traded financial contract between two or more parties to buy or sold an asset/commodity on an agreed time and price. The future value of the derivative is highly influenced by its underlying asset in the Spot Market.

Financial Derivatives

Derivatives listed in the Exchange are financial derivatives, which derived from financial instruments such as stock, bond, stock index, bond index, currency, interest rate and other financial instruments. Financial derivatives are often used by Investors and Issuers to perform hedging on their portfolios.

Jurisdiction

• Capital Market Law of the Republic of Indonesia No. 8 year 1995 concerning the Capital Market
• The Government Regulation of the Republic of Indonesia No. 45 year 1995 concerning the Capital Market Organization
• The Decision of the Chairman of Bapepam No. Kep.07/PM/2003 dated February 20, 2003 concerning Futures Contract on Security Index as Security
• The Bapepam Rules No. III. E. 1 dated October 31, 2003 concerning Futures Contract and Option on Securities or on Securities Index
• Circular Letter from the Chairman of Bapepam No. SE-01/PM/2002 dated February 25, 2002 concerning Futures Contracts Index in the Net Adjusted Working capital Report of Securities Company
• Approval Letter of Bapepam No. S-356/PM/2004 dated February 18, 2004 concerning the Agreement of Foreign Futures Contracts (DJIA & DJ Japan Titans 100)

Several Derivative products traded at IDX: