Bank Negara Malaysia and the Hong Kong Monetary Authority (HKMA) announced on Monday the implementation of a cross-border delivery-versus-payment (DvP) link between Hong Kong’s US dollar real time gross settlement (RTGS) system.
The DvP link will help eliminate settlement risk for US dollar bonds issued and traded in Malaysia, by ensuring simultaneous delivery of US dollars in Hong Kong and US dollar bonds in Malaysia.
The DvP settlement services provide the necessary settlement infrastructure to support potential issuance of US dollar bonds in Malaysia, as part of the initiatives to promote Malaysia as an Islamic financial centre and Hong Kong as an international financial centre.
The new link builds on the success of the payment-versus-payment (PvP) link between Hong Kong's US dollar RTGS system and Malaysia's Ringgit RTGS system that was established in November 2006.
Similar to the PvP link, the DvP link is operated in Malaysia by Bank Negara Malaysia, and in Hong Kong by Hong Kong Interbank Clearing Limited, which operates the interbank clearing systems in Hong Kong, and is jointly and equally owned by the HKMA and the Hong Kong Association of Banks.
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