Five Southeast Asian stock exchanges have signed an agreement to establish a single electronic trading link for regional or global investors to access their markets on a uniform basis, and thereby establish Asean markets as an asset class, The Asian Investor reports.
The mechanism among the five countries – Indonesia, Malaysia, the Philippines, Singapore and Thailand – will enable their clearing houses to act as central counterparties that can clear and settle cross-border trades among them.
Brokers with seats in any of the five exchanges would not need to consider other participating exchanges as foreign, thereby reducing risk. Investors may come to see Asean as a trading bloc, with economies of scale helping to bring down transaction costs and improve liquidity. Creating a single market would spur liberalisation in other areas. That, at least, is the theory, as announced after business hours yesterday. Executives at these bourses have been talking about building an electronic link for years. These markets are small, which drives up the cost of cross-border trades.
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