DERIVATIVES

1. Eileen Florisa H.S (2123756108)

2. Anastasia A.B Keban (2123756095)
3. Dyanra P. Chaidir (2123756105)
4. Efaristha Leonutu (2123756106)
5. Gilroy Stivano Mira (2123756113)
 DERIVATIVES
Derivatives are contract agreements entered into by two or more
parties with the aim of selling or buying assets or commodities. Later,
the contract will serve as the object of trade. The price of this contract
value must be agreed by both parties. It is also influenced by the price
value of the parent asset or commodity.
(NISP R. O., 2022)
DERIVATIVES TRANSACTIONS

A derivative transaction is a derivative transaction

which is an agreement between two parties known as
counterparties (related parties). In general terms, a
derivative transaction is a bilateral contract or an exchange
payment agreement whose value depends on the 4 derived
from the asset value, the reference level or index.

(Suciyani, 2014)
Types of Derivative Transactions

❖ Future
❖ Forward
❖ Swap
❖ Options
 Derivative Transaction Users

❖ End Users ❖ Brokers (Dealers)

The reasons that encourage end users Consists of financial institutions that act as brokers.
to use a derivative instrument are : The functions of the dealers, among others :

1. For hedging 1. Maintaining liquidity and continuous availability

of transactions.
2. Obtaining a lower cost of funds 2. Fulfilling end-user demands promptly.
3. Increasing profits 3. Providing the ability to enhance market liquidity and
price efficiency.
4. To diversifying sources of funds
5. To reflecting the views of the
market through the position
taken.
Reasons for Using Derivatives

According by (Suciyani, 2014) journal the reasons for using derivatives

include :
1. The ever-changing and highly.
2. Variable needs of a group of users.
3. Tools to manage risk.
4. Hedging current and future risks.
5. Taking market risk positions.
6. Search for greater results.
7. Lower funding costs
8. Take advantage of existing inefficiencies between markets.
 The Meaning of Foreign currency translation

Foreign currency translation is the process of restating financial information

from one currency to another. Terms in foreign currency translation :
1. Convertion
2. The Current Exchange
3. The Position Of Net Assets at Risk
4. A Forward Exchange Contract
5. Functional Currency
6. Historical Exchange Rate
7. Reporting Currency
8. Spot Rate
9. Translation Adjustment
 Foreign Currency Translation Advantages and Disadvantages

(Suciyani, 2014)

1. Deferral Changes in the domestic currency equivalent

2. Suspension and Amortization
3. Partial Deferral Of Translation Gains and Losses
4. Not Defered Recognize Translation gains and Losses
 Examples of cases of derivative transactions
❖ Exemple Of Case
(Stephanus, 2020)

The case that occurred in PT Elnusa and Bank Danamon is an example of a derivative transaction
case, where Bank Danamon has derivative products such as hedging transactions or hedging in the
form of foreign exchange forward contracts in US dollars. And generally, the customers are
exporters who depend on commodity prices and exchange rates. In this forward contract, exporters
sell US dollars to banks within a period of one year.
Forward transactions are contracts made in the present to be concluded in
the future. Because it is a contract, both parties to the agreement must
fulfill the contents of the contract. And for the ownership of this
derivative contract, non-Islamic Bank Danamon offers its products in the
form of hedging to PT Elnusa which applies for financing in foreign
currency to Bank Danamon Syariah. PT Elnusa, which initially wanted to
transact in sharia, then fell asleep with conventional Bank Danamon's
appeal to use derivative products in the form of hedging to secure its
loans in foreign currency. This can happen because PT Elnusa cannot
distinguish which products are sharia and which are not sharia.
 This ignorance of customers is used by non-sharia Bank Danamon to
reap maximum profits. This shows that the management at Bank
Danamon does not intend to sell products that are truly syriah. The
opening of a sharia business unit at Bank Danamon is solely based on
obtaining the maximum profit.
However, even though this case has occurred, this derivative transaction did not
last long enough. This is because the rupiah exchange rate is getting weaker and
weaker which has a negative impact on this transaction. Because this derivative
transaction activity is only speculative. So the level of profit that will be obtained
is not yet clear how much. Bank Danamon in this case can be said to be the party
that suffered a big loss, due to the large amount of funds lost due to this
derivative transaction. Meanwhile, Elnusa Tbk did not suffer a loss in this case
because of course according to the agreement that was signed initially so that the
loss was borne by Bank Danamon which reach billions of rupiah.
 Bank Danamon and Elnusa case solution
In this case, Bank Danamon and Elnusa have negotiated and agreed that “Danamon is
willing to bear the losses due to the derivative transaction. Meanwhile, Elnusa did not
share in the loss.”
From the perspective of Bank Indonesia as a banking supervisor:
1. Conduct mediation so that both parties avoid disputes in court
2. Issue a regulation that derivative products are only allowed for customers or parties
who understand the product
3. There is a regulation that states that if banks want to play in derivative transactions,
there will be a number of procedures that must be passed.
4. Derivative transactions must be distinguished between those aimed at hedging and
speculation
5. There is a rule that states that banks are only allowed to carry out derivative
transactions specifically for foreign exchange, interest rates, or a combination of both.
Meanwhile, derivatives for stocks and commodities are not allowed by banks.
 Our suggestion
In our opinion, there are several things that can be done in the case of
derivatives:
1. Stricter rules are needed from Bank Indonesia regarding what
Islamic banking can and cannot sell.
2. The customer must know more about the banking used in sharia,
then he must know what things are allowed to be done in sharia
banks and what are not.
3. In terms of bank management or marketing, they should not only
seek profit in their work, but must uphold the rules that exist in the
bank that are followed.
 CONCLUSION
Derivatives is a bilateral contract or payment exchange
agreement whose value is derived from or derived from the
product that is the "principal reference" or also called the
"underlying product"; Instead of trading or physically
exchanging an asset, market participants make an
agreement to exchange money, assets or a value in the
future with reference to the asset that is the main reference.
Translation is a change in monetary units, not the same as
a conversion which is a physical exchange from one
currency to another, such as only a balance sheet expressed
in IDR restated in US Dollar equivalent values.