Asian CSDs can overcome disadvantages with a common platform model
Esmond Lee, executive director (financial infrastructure), HKMA, shares his views about the underlying problems with Central Securities Depositories and how a common platform model can help overcome them. May 12, 2011 | Esmond LeeAsian central securities depositories (CSDs) share many similar disadvantages. They suffer from less-than-efficient cross-border activities and asset servicing, fragmented markets, multiple access points and varied market practices. To combat this, a task force formed by a group of central banks and CSDs in the region outlined the concept of a Common Platform Model (CPM) in order to gain better cross-border access to local Asian bonds. It also promises to have an effect on greater issuance of local bonds, improved automated processes to manage operational risk, and provide access to a larger pool of collateral, as well as reduce costs for post-trade executions. The task force’s strategy is to start with improvements to interoperability and cross-border access through investor CSDs, leveraging existing CSDs links and then gradually improving local market practices, local CSD processes and cross-border links. Working together would allow convergence of developments across markets, leading to harmonisation of processes and a gradual introduction of common systems. Individual participating CSDs retain autonomy in terms of legal entity, finance, business development and customer relations. Progress towards the implementation of the CPM has been made and during the 5th task force meeting held in Hong Kong in November 2010, and two experience-sharing workshops were held to discuss the necessary preparation and proposed setup of the pilot platform, in order to prepare for its launch in mid 2011. Potential add-ons to the pilot platform include corporate action servicing to enhance market efficiency in processing corporate actions and cross-border collateral management to help banks manage their liquidity more effectively by better utilising foreign securities lodged with ICSDs or overseas CSDs. Slide 1: CPM proposed by task force Please login to read the complete article. If you already have an account, you can login now or subscribe/register. Categories: Asian Banker Summit 2011, Asset Management, Trustees and Custodians, Markets & Exchangessummit 2011,Trustees Custodians and Depositories,Markets Exchanges, Asian Banker Summit 2011,Asset Management, Trustees and Custodians,Markets & Exchanges, Keywords:CSD, Securities CSD, Securities
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