HKMA and China Government Securities Depository Trust & Clearing Co. Ltd establish Central Securities Depository Link

To foster cross-border debt securities settlement between the Mainland China and Hong Kong, the Hong Kong Monetary Authority (HKMA) signed an agreement today (Wednesday) with the China Government Depository Trust & Clearing Co. Ltd (CDC) to establish a direct link between the HKMA's Central Moneymarkets Unit (CMU) and CDC's Government Securities Book-Entry System (GSBS).

This will be a one-way link from the GSBS to the CMU so that CDC Members (including banks, trust companies and other financial institutions in the Mainland) that are authorised to invest in foreign debt securities may settle and hold Hong Kong and foreign debt securities through the CDC's account with the CMU.

The CMU, operated by the HKMA, offers a safe, convenient and efficient clearing, settlement and custodian system for debt instruments lodged in the CMU. The outstanding value of debt securities lodged with the CMU is HK$338 billion equivalent, about 60% of total outstanding amount of Hong Kong dollar debt securities. The value of debt securities held by domestic and foreign investors through the existing central securities depository links amounts to HK$24 billion equivalent.

"This new GSBS/CMU link greatly improves access for Mainland investors to debt securities outside the Mainland in a safe and cost-effective manner," said Mr Norman Chan, Deputy Chief Executive of the HKMA, who signed the agreement in Beijing today with the Chairman of the CDC Mr Wang Chun.

Deputy Governor Wang Hong Zhang of the People's Bank of China (PBoC) together with senior officials from the PBoC, the National Development and Reform Commission, the Ministry of Finance, the China Banking Regulatory Commission, the State Administration of Foreign Exchange, and the China Foreign Exchange Trading System were also present to witness the signing ceremony.

Mr Joseph Yam, Chief Executive of the HKMA, welcomed the link. "The joint effort between the CDC and the HKMA in establishing the link represents another step forward in co-operation between the Mainland and Hong Kong. The HKMA will continue to look for opportunities to augment the efficient and robust financial infrastructure in Hong Kong to meet the needs of the increasingly sophisticated financial linkages with the markets in Hong Kong, the Mainland and the rest of the world," Mr Yam said.

For enquiries, please contact:

Mr Thomas Chan, Senior Manager (Press) at 2878 1480 or
Kevin Ip, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
28 April 2004