The Hong Kong Monetary Authority (HKMA), Bank Negara Malaysia (BNM) and Euroclear Bank have jointly launched a pilot platform for the cross-border investment and settlement of debt securities. The platform will go live on March 30 2012 to enhance cross border debt securities settlement efficiency and strengthen the capacity for debt securities issuance activities in the Asian region.
Through the pilot platform, investors in Hong Kong and Malaysia can buy and hold foreign debt securities and settle cross-border transactions on a DVP basis whilst local and international bond issuers can issue a wide range of debt securities. The pilot platform also includes a debt securities database of Asian debt securities maintained by Euroclear Bank.
This would facilitate harmonization of market practices and standardization of the issuance and settlement of debt securities to deepen Asian bond market liquidity, attract investment and increase operational efficiency.
The platform entails the optimization of existing system links between the Central Money Markets Unit (CMU) of the HKMA, RENTAS of BNM and Euroclear Bank and the connections between local central securities depositories (CSDs) and foreign currency RTGS systems in Asia as well as sharing certain Asian CSD services.
Commenting on the platform, Peter Pang, deputy chief executive of the HKMA, said: “It is a strategic alliance that goes much beyond commercial cooperation and will bring about more significant benefits
in fostering global and regional bond market development as well as promoting financial stability in the region. The HKMA will continue to collaborate with BNM and Euroclear Bank to promote the pilot platform to other central banks and securities settlement systems in the region and implement additional services to meet market needs.
Muhammad Ibrahim, deputy governor of BNM, said: Bank Negara Malaysia has been collaborating with central banks in the region on the platform for the settlement and depository of debt securities and sukuks. The rollout of the Pilot Platform provides investors and market intermediaries an efficient and cost-effective cross-border access to the bond markets in Malaysia and Hong Kong. As we expect ongoing growth of emerging East Asian markets, the implementation of the Pilot Platform would indeed be an important step towards sustaining growth and development in the region.
Anso Thir, managing director and head of Business Development for the Euroclear group, said: Euroclear Bank has strong ties with the Asia-Pacific region, having operated with offices in the region since the 1980s. We value the trust that the HKMA and BNM have placed with us to partner them as they embark on a multi-faceted programme of regional post-trade improvements. We look forward to working with other Asian markets on their settlement, collateral management and corporate action processing challenges.
(JDC)