Hong Kong, Malaysia launch platform to shore up cross-border trading

By Susanna Moon

Chicago, March 13 - The Hong Kong Monetary Authority, Bank Negara Malaysia and Euroclear Bank announced a pilot platform for the cross-border investment and settlement of debt securities in Hong Kong and Malaysia.

The pilot platform will begin operating on March 30 and is designed to enhance cross-border debt securities settlement efficiency and strengthen the capacity for debt securities issuance activities in Asia, according to a joint press release.

The plan involves using existing system links between the Central MoneyMarkets Unit (CMU) 1 of the Hong Kong Monetary Authority, Rentas2 of Bank Negara and Euroclear Bank and the connections between local central securities depositories and foreign-currency RTGS systems in Asia as well as sharing certain Asian CSD services.

Specifically, the platform will strengthen the cross-border issuance of, and foreign investment in, local bonds in Hong Kong and Malaysia.

Through the platform, investors in Hong Kong and Malaysia can buy and hold foreign debt securities and settle cross-border transactions on a delivery-versus-payment basis while local and international bond issuers can issue a wide range of debt securities, the release noted.

The platform also includes a comprehensive 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, according to the release.

The platform "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," Peter Pang, deputy chief executive of the Hong Kong Monetary Authority, said in the release.

"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 Bank Negara, added, "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.

"This marks a major milestone for regional financial integration, and a step towards a unified bond market platform across Asia."

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