Bilateral Linkage between the Central Securities Depositories in Hong Kong and New Zealand

The Hong Kong Monetary Authority (HKMA) and the Reserve Bank of New Zealand (RBNZ) jointly announced today that a reciprocal bilateral linkage between the Central Moneymarkets Unit (CMU) operated by the HKMA and the securities depository in New Zealand (Austraclear New Zealand System) will commence operation on 30 April 1998. Besides helping the development of the securities market, these bilateral linkages will also help to reduce settlement risk by facilitating cross-border delivery versus payment (Annex).

"Further to CMU's link with the securities depositories in Australia established in December 1997, this is another major step forward for cross-border securities linkages in the region. This is part of the on-going effort to develop the Asian debt market through enlarging the investor base by facilitating cross-border securities transactions in a safe and efficient settlement mode." said Mr. Joseph Yam, Chief Executive of the HKMA.

The Governor of the Reserve Bank of New Zealand, Dr Don Brash, said "This linkage is expected to broaden the investor base for New Zealand's debt market. It will provide a more direct route for settlements between New Zealand and Hong Kong and help develop financial markets that are safer and more efficient for investors".

Jointly Issued by:

The Hong Kong Monetary Authority
The Reserve Bank of New Zealand

29 April 1998

Annex

BILATERAL SECURITIES LINKAGES

Objectives

• To facilitate cross-border holding and trading of debt securities
• To reduce settlement risk of cross-border securities trade by facilitating DvP settlement for cross-border securities transactions

Bilateral Linkage with New Zealand

• HKMA will become a member of Austraclear New Zealand System (AclNZ) operated by RBNZ, AclNZ provides clearing and settlement services for government and private sector debt securities in New Zealand.
• RBNZ will become a member of CMU operated by HKMA, CMU provides clearing and settlement services for government and private sector debt securities in Hong Kong
• Linkages between CMU and AclNZ will commence operation on 30 April 1998

HKMA becoming a Member of AclNZ

• CMU Members can trade and hold New Zealand debt securities
• CMU will act as custodian of New Zealand debt securities for CMU Members

RBNZ becoming a Member of CMU

• AclNZ Members can hold and trade Hong Kong debt securities
• AclNZ will act as custodian of Hong Kong debt securities for AclNZ Member