The Singapore Exchange (SGX) has called for further integration of the ASEAN capital markets to respond to global competition, including the establishment of an exchange-owned regional clearing and depository utility.
The Association of Southeast Asian Nations (ASEAN) is made up of ten countries in the region including Singapore, Thailand and Vietnam.
SGX's chief executive Mr Hsieh Fu Hua called for further integration of the markets in the ASEAN countries during a speech given at a Citibank-sponsored Conference.
He says the integration of the markets and a regional clearing and depository utility would lead to growth in securities trading within the region.
Referring to the consolidation of exchanges in US and Europe, Hsieh says so far, consolidation has largely occurred in the trading arena, rather than the post-trade environment. In order to lower costs and increase value for customers, more attention should be focused on integrating clearing and settlement operations.
"The objective of the utility is to provide clearing and custody facilities to ASEAN exchanges for cross border trading of ASEAN products by their respective brokers," he says.
Hsieh adds that ASEAN depositories may also establish custody relationships with one another through the utility to further streamline the custody and settlement of regional transactions by the respective domestic brokers in the region.
"As an initial step, we could promote integration through harmonizing and aligning our market practices and standards with the international investment community," says Hsieh. "Having common standards is akin to developing a common gateway into ASEAN. This would promote efficient post trade processing, thereby reducing the risk and cost of investing in ASEAN."