At a signing ceremony held today (Friday), the Hong Kong Monetary Authority (HKMA) announced that BondsInHongKong Limited (BIHK), a subsidiary of BondsInAsia Limited (BIA), which operates a front-end electronic trading platform for debt securities in Hong Kong, has been granted a licence to enter into an arrangement to provide a direct electronic clearing and settlement linkage using a system interface with the Central Moneymarkets Unit (CMU), which is the central custodian and clearing system for debt securities operated by the HKMA.
The system interface between BIHK and the CMU will facilitate straight-through processing (STP) for over-the-counter debt securities transactions which are cleared through the CMU. Electronic bond trading platforms such as that provided by BIA can help to enhance secondary market liquidity of the local debt market and improve the price discovery process. In consultation with BIHK, the CMU is developing a system interface software to enable the front-end trading platform of BIHK to link directly with the CMU.
The interface will allow direct transmission of transaction information after trade execution from the electronic trading platform to the CMU system. After obtaining confirmation of the trade from the CMU members through their CMU terminals, the CMU will process the final settlement.
"This straight-through-processing facility will streamline the settlement process and enhance settlement efficiency, to the general benefit of the debt market in Hong Kong. The interface will minimise manual intervention in the post-trade process and reduce operational costs for market participants. We welcome developments of this nature to further strengthen the financial market infrastructure in Hong Kong," said Mr Tony Latter, Deputy Chief Executive of the HKMA.
Mr Albert L. Cobetto, CEO of BondsInAsia and Board Member of BondsInHongKong said, "BondsInAsia and its subsidiary, BondsInHongKong are delighted to be working with the HKMA on this major infrastructure initiative which will further develop the Hong Kong debt market. This interface will bring a new era of trading and operational efficiencies to the markets in Hong Kong and later, for the rest of the Asian region."
Background Information about the HKMA and BIA
The HKMA
The Hong Kong Monetary Authority is responsible for maintaining monetary and banking stability, managing Hong Kong's official reserves and developing Hong Kong's financial infrastructure. The HKMA operates the CMU, which serves as an electronic depository for debt instruments and provides related settlement facilities. These services are available to issuers and investors in Hong Kong and further afield, and for debt securities denominated in Hong Kong dollars or other currencies. The value of securities held in the CMU is around HK$338 billion (US$ 43 billion).
BondsInAsia
BondsInAsia has developed BTX, the most sophisticated global electronic trading platform for Asian fixed income securities. BTX supports multi-dealer functionality in both local currency bonds and G3 denominated Asian credits. It allows market makers and institutions to complete Asian fixed income deals electronically on a bilateral basis with speed and efficiency in a secure environment. BTX provides prices for both Asian government and corporate bonds, and Asian credits in reserve denominated currencies. Trading volume in 2002 has exceeded US$15 billion to date. Individual BondsInAsia franchises are created in local markets throughout Asia and local dealers participate in the ownership and governance of the BondsInAsia franchise in their local market. Shareholders of BondsInAsia are Citigroup, Deutsche Bank, HSBC, BNP Paribas, Credit Suisse First Boston, Hong Kong Exchanges and Clearing, ABN AMRO, Bank of America, JPMorgan and Reuters.
BondsInHongKong is the BondsInAsia subsidiary that trades Hong Kong dollar debt. Shareholders of BondsInHongKong include HSBC, Citibank, Deutsche Bank, BNP Paribas, Credit Suisse First Boston, Hang Seng Bank, Barclays Bank, Bank of America and JP Morgan.
For further enquiries, please contact:
Hong Kong Monetary Authority
Ms Jasmin Fung, Manager (Press), at (852) 2878 8246
BondsInAsia
Ms Jennifer Chen, Vice President, at (852) 3140 2668 or (852) 9266 0060
Hong Kong Monetary Authority
BondsInAsia
18 October 2002
