Press Release
Understanding Legal Commodity Futures Trading Transactions
Understanding Legal Commodity Futures Trading Transactions
Tuesday, 15 March 2022

Currently, there are many issues regarding brokers and illegal transactions such as binary options. Binary options are products that are duplicated from options products. Where this option product is a product used for hedging purposes.

“The definition of an option according to the Commodity Futures Trading Law is a contract that gives the buyer the right to buy or sell a Futures Contract or a certain Commodity at a predetermined price, amount, and period by paying a premium. Or based on a mutual agreement at the beginning, "explained ICDX Business Development Manager, Dedi Prasetyo.

The correct option product is actually like insurance. The premium paid in advance is to protect against losses in the event of future losses. For example, example, trader A uses an option product to hedge gold in the next year. Then trader A will be withdrawn or pay a premium upfront to carry out the hedging. When the contract has been completed, if the option contract that trader A takes suffers a loss, then trader A will only suffer a loss to the extent of the premium paid earlier. But on the other hand, if the option that trader A takes is following what he wants, namely profit, then trader A will benefit from the price difference at the time of opening the option contract until the expiration of the option contract.

In simple terms, this option is like a forward product or an option available at banks in Indonesia. Usually, forward products or options offered by the bank, the contract is for a long period because the purpose is for hedging purposes by the bank's customers, not for speculation.

Binary options are very different from actual options products. They designed this binary options product as if it were an easy and easy investment product to make a profit. They use affiliates and influencers on social media and digital platforms to market these binary options products. These affiliates get a share of up to 80% of each customer who experiences losses. With the character of the Indonesian people who easily believe if the product is advertised by an influencer or public figure, and with the lure or promises of getting profits in a very fast way, so many people are easily fooled and experience losses from these binary options product.

Furthermore, Dedi explained that this type of binary options transaction is said to be illegal because:

First, the broker who sells binary options does not have a license to carry out activities as a broker/broker in Indonesia. Transaction activities are prohibited and do not get a permit from BAPPEBTI for violating the PBK Law article 1 number 8 of Law No. 10 of 2011. To be able to offer a future product, the product must also obtain permission from BAPPEBTI by submitting a product first. Then the product is tested. Eligible or not, whether there is a need from the community or not, and so on. So the product submission process will also be thoroughly reviewed by BAPPEBTI. If it does not bring benefits, and instead plunges the community, surely the application will be rejected.

Then secondly, because the broker/broker who sells the binary options product does not have a license or is an illegal broker, it can be ascertained that the product is illegal.

Finally, all business activities that involve withdrawing funds from the public with the attachment of investment must have a permit from the relevant regulations. Customer funds must also be placed in a clearinghouse to ensure the security of customer funds. So if the business activity does not have a permit, it can be ascertained that the business activity is illegal. If the products offered are commodities and their derivatives, then that is the domain of BAPPEBTI. As for the capital market, insurance, finance, banking, it is under the authority of the OJK.

“In trading, every customer can do what is called analysis, set a stop loss level to maintain risk, and determine a take profit level. While binary options can not do like that. Players can only guess the price will go up or down. In addition, in terms of transaction time, it is limited to a maximum of open positions for only one day. It depends on the time you want to open a trading position, five minutes, one hour, four hours, but what is certain is that the maximum is only one day," concluded Dedi.

As a Commodity Futures Exchange, ICDX Group provides training programs for traders who want to understand Commodity Futures Trading transactions. For further information, please visit www.icdx.co.id/gofx.

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