The Hong Kong Monetary Authority (HKMA) and the Korea Securities Depository (KSD) signed agreements today (Tuesday) to set up a reciprocal bilateral linkage between the HKMA's Central Moneymarkets Unit (CMU) and the KSD that will provide clearing and settlement services for public and private debt securities in South Korea. The CMU Membership Agreement and the KSD Depository Agreement were signed by Mr Joseph Yam, Chief Executive of the HKMA and Mr Dong-kwan Kim, Chairman and CEO of the KSD at a ceremony held today.
The link between the CMU and the KSD will commence operation on 8 September 1999. This is the third bilateral linkage the CMU has established with central securities depositories in the Region. In addition to promoting the development of the regional debt market, these bilateral linkages will also help to reduce settlement risk by facilitating cross-border delivery versus payment (Annex).
"Following the recent establishment of links between the CMU and the securities depositories in Australia and New Zealand, this link between the CMU and the KSD marks another major step forward for cross-border securities linkages in the Region. This forms part of the on-going effort to develop the Asian debt market by facilitating cross-border securities transactions in a safe and efficient settlement mode. We intend to set up more linkages of this kind with other systems in the Region," said Mr Joseph Yam, Chief Executive of the HKMA.
"The linkage we have now established will encourage the development of a larger investor base in both South Korea and Hong Kong and provide greater cost-efficiency. Once the prepared system goes live, investors from these two places will no longer have to go through separate custodian networks but will have a direct contact to the KSD and HKMA, by using direct accounts. This will greatly improve the safety and efficiency of their investment activities. The KSD values the linkage with the HKMA very much because it provides many opportunities for the KSD to learn from the HKMA, which has ample experience in maintaining co-operative relations in international economies," said Mr Dong-Kwan Kim, Chairman & CEO of the KSD.
Issued by :
The Hong Kong Monetary Authority
The Korea Securities Depository
7 September 1999
Annex
(Information Sheet)
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 South Korea
- The HKMA will become a member of the Korea Securities Depository (KSD), which provides clearing and settlement services for government and private sector debt securities in South Korea.
- The KSD will become a member of the CMU operated by the HKMA. The CMU provides clearing and settlement services for government and private sector debt securities in Hong Kong.
- Linkages between the CMU and the KSD will commence operation on 8 September 1999.
The HKMA to become a Member of the KSD
- CMU Members can trade and hold Korean debt securities.
- The CMU will act as custodian of Korean debt securities for CMU Members.
The KSD to become a Member of the CMU
- KSD Members can hold and trade Hong Kong debt securities.
- The KSD will act as custodian of Hong Kong debt securities for KSD Members.
