Market Integration: An Intermediary s Perspective

Transcription

1 Market Integration: An Intermediary s Perspective ASIAN BOND MARKET CONFERENCE 2009 KUALA LUMPUR R O J E A N N E S E N

2 AGENDA Introduction Role of Intermediaries in a Cross-Border Transaction How Intermediaries Link Investors to Domestic Markets GoE RSI Options and Service Suite Asian I Linkage Impact of RSI Options Intermediaries National s

3 OVERSEAS DOMESTIC INTERMEDIARIES LINK INVESTORS TO DOMESTIC MARKETS NATIONAL CENTRAL DEPOSITORY Local Custodian Local Broker Cash Security Trading Clearing Global Custody Agreement Contract of Trade Global Custodian Foreign Broker Cash Security Trading Clearing Custody Agreement Contract of Trade CROSS-BORDER INVESTORS

4 ROLE OF INTERMEDIARIES IN CROSS-BORDER TRANSACTIONS

5 RSI OPTIONS UNDER REVIEW BY GoE EURO- CLEAR LINKUP MARKETS CLEAR- STREAM ASIA N I LINKA GE

6 ASIAN I LINK CONCEPT Investors Trade Investors Provides a single point of entry into ASEAN+3 markets Custodian Custodian Cost efficient Internal Settlement Integrated Cash/FX management services Settlement Instruction Asian I Settlement Instruction ASEAN issuers get access to wider investor base Local Custodian Depending on the Model Local Clearing System Deposit of Securities Issuer ASEAN asset class in our time zone Settlement & Liquidity may move off-shore Diagram by Eli Cohen, ADB Consultant NATIONAL s PERSPECTIVE s can extend direct membership to the Asian I If cash and securities settlement services are placed in a single platform, in-bound cross-border transactions can flow directly to

7 LINKAGE CONCEPT Investor 1 Connects Investors s to Issuers s Participant 1 (e.g. Custodian) LINKAGE Investor s would offer cross-border services for multiple currencies investments to local Participants Issuer S would provide Services to Investor s Intermediaries Perspective: Domestic Custodians can provide crossborder services via accounts at local [Investor] s Custodians may access ASEAN+3 markets via any from any one hub in ASEAN. Can be a cost efficient solution for global/regional providers. Participant 2 (e.g. Broker) Investor 2 NATIONAL s PERSPECTIVE s will be able to compete Widening Service Offering On Efficient Linkage/System connectivity. Will the developing s loose out to larger financial Centres Diagram adapted from chart by Robert Somogyi, ADB Consultant

8 RSI OPTIONS: PREREQUISITES AT LEVEL Asian I Linkage Securiites s: External Settlement/Market Link Support Omnibus Structure No Requirement for Licensing/Authorizations Recognition of Intermediated Holdings Securiites s Admittance of foreign s as Intermediaries Authorization for s to hold foreign securities Investor Licensing/Authorizations not required Transfer Agent model must be supported Cash s: Commercial Bank Money Convertible /Transferable Currencies Liberalise FX Controls and /or Reporting No Restrictions on Remittances Cash s: Commercial Bank Money Convertible / Transferable Currencies Liberalise FX Controls and/or Reporting No restrictions on Remittances Use of cheques and/or paying agents

9 MARKET INTERGRATION: SUMMARY OF PERSPECTIVES Investors and Issuers Cost efficient Operating Environment Safe-settlement & holding of Securities In a single account/point of access to multiple markets National s Removing barriers to facilitate flow of investments Creating single/larger market place for diversification Could increase competition amongst s Participants services multi-currency, DvP and PvP Foreign Exchange Risk?

10 BOND MARKET INTERGRATION: ROLES OF THE PUBLIC & PRIVATE SECTORS Public sector needs to be engaged as Sovereign debt papers make up the largest component of the Bond Market in ASEAN+3 Private sector needs to get involved as Changes will directly impact business/operational models Cost of Integration Monetary vs. Economic Focus on the aims of the ABMI Increasing cross-border bond trading activities Keeping ASEAN savings in Asia

11 Thank You