As part of a continuing initiative to cement Hong Kong's position as a regional financial hub, the Hong Kong Monetary Authority has announced that from next year, it will be linking its bond settlement system to Euroclear, its European counterpart based in Brussels.
This move will allow investors in Hong Kong to settle Euroclear eligible debt securities via the central money-markets unit in Hong Kong. At present, Asian traders must wait for the European markets to open to settle through Euroclear, so the planned link will greatly reduce settlement time, and by extension risk.
Accordng to HKMA Chief Executive, Joseph Yam Chi-kwong, the link represents another significant step forward in the promotion of efficient cross-border transactions, and as well as attracting more investors to the Hong Kong markets, will encourage more fund managers to manage global debt portfolios through the region.
'Investors and issuers in the bond markets increasingly require a global reach, and they have come to expect continual improvements in clearing and settlement arrangements so as to increase efficiency, reduce costs and contain risk,' he explained to the South China Morning Post on Tuesday.
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