HKMA to form direct link to Euroclear

The Hong Kong Monetary Authority (HKMA) and Euroclear plan to build a direct link between the HKMA’s central money markets unit (CMU) and the Brussels-based international central securities depository.

The link, scheduled to go live by the end of 2002, will allow investors in Hong Kong and the rest of the Asia Pacific region to directly hold and settle Euroclear-eligible debt securities via their CMU accounts. This will allow them to contain risk as well as to increase efficiency and reduce costs, claimed HKMA chief executive Joseph Yam.Euroclear clients can already clear and settle debt securities lodged with the CMU through an indirect one-way link that was established from Euroclear to the CMU by UK bank HSBC in 1994. But the direct hook-up is aimed at attracting more investment to Hong Kong while allowing Asian investors to better manage their risk.

"[This] should be especially convenient to those managing global portfolios from or through Hong Kong," said Yam.