Clearstream to Develop Settlement Link With Taiwanese CSD

Clearstream has opened an account with the Taiwanese Central Securities Depository (TDCC) to develop a direct settlement link. The link will allow global investors and issuers to access the Taiwanese international bond market such as Formosa bonds.
By Janet Du Chenne(59204)
Clearstream has opened an account with the Taiwanese Central Securities Depository (TDCC) to develop a direct settlement link. The link will allow global investors and issuers to access the Taiwanese international bond market such as Formosa bonds.

By opening an account with the TDCC, Clearstream becomes an international central securities depository (ICSD) foreign participant of this local CSD. The settlement link, to be operated by Deutsche Bank, Taipei branch and due for completion in the coming year, will offer settlement and custody services for the foreign currency denominated bonds including the “Formosa bond”. This development follows new measures from the Taiwanese regulators, which pave the way for foreign investors to be able to more readily invest in the Taiwanese market.

The Formosa bond in Taiwan is one way for investors to gain offshore access to the RMB, which has seen increasing investor appetitive as a growing world currency. China is the second largest economy in the world with its currency presently standing in 8th place as a world payment currency by value, having risen from 20th place since 2012, according to SWIFT’s statistics.

According to the Central Bank of the Republic of China (Taiwan), the current RMB deposits in Taiwan, as of February 2014, is in the excess of RMB 247 billion for domestic investors. However, participation for foreign investors currently remains very limited given the market infrastructure does not yet exist to enable an increase in foreign investment – Clearstream’s settlement link will help address this by offering a new direct channel for foreign investors to access the Formosa bond market.

Berthold Kracke, head of Business Management, responsible for Network Management and Member of the Clearstream Executive Board, Clearstream, comments: “There is an ever growing appetite amongst international investors for investments in Asia, and the Taiwanese market can play an important role in this. Today, we are delighted to celebrate our first step in developing a direct settlement link to this important market – namely, a Clearstream account opening at the Taiwanese central securities depository, TDCC. This paves the way to deliver global access to the Taiwanese market as an important contribution to connecting Asian issuers with global investors. We look forward to working with TDCC to offer and facilitate optimal access to the Formosa bond market.”

The Taiwanese Central Securities Depository (TDCC) comments: “In conjunction with the government’s active promotion of unprecedented international business development opportunities, TDCC is committed to attract international central securities depositories to Taiwan and to connect with international investors. Clearstream’s participation in TDCC will facilitate investments and settlement between international investors and the Taiwan international bonds market.”

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