Hong Kong
13 March 2012
Reporter: Ben Wilkie
Securities Lending default image

Trio launch Asian cross-border settlement pilot


The Hong Kong Monetary Authority (HKMA), Bank Negara Malaysia (BNM) and Euroclear Bank have announced the launch of a pilot platform for the cross-border investment and settlement of debt securities (Pilot Platform) that will be operational on 30 March 2012, to enhance cross-border debt securities settlement efficiency and strengthen the capacity for debt securities issuance activities in the Asian region.

The launch of the Pilot Platform will strengthen the cross-border issuance of, and foreign investment in, local bonds in Hong Kong and Malaysia. Through the Pilot Platform, investors in Hong Kong and Malaysia can buy and hold foreign debt securities and settle cross-border transactions on a Delivery-versus-Payment (DvP) basis whilst local and international bond issuers can issue a wide range of debt securities. The Pilot Platform also includes a comprehensive debt securities database of Asian debt securities maintained by Euroclear Bank.

The Pilot Platform signifies an important step for Asian bond markets, supported by an international central securities depository, to collaboratively strengthen post-trade infrastructure. This would facilitate harmonisation of market practices and standardisation of the issuance and settlement of debt securities to deepen Asian bond market liquidity, attract investment and increase operational efficiency.

The Pilot Platform entails the optimisation 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.

Peter Pang, deputy chief executive of the HKMA, said: "We are pleased to see the Pilot Platform going live. 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. This marks a major milestone for regional financial integration, and a step towards a unified bond market platform across Asia. 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 Thiré, managing director and head of business development for the Euroclear group, said: “Euroclear Bank has supported the initiative from the beginning and is very happy to work closely with our Asian colleagues to deliver practical ways of further improving the bond market infrastructure in Asia. 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.”

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