Euroclear SA/NV and the China Government Securities Depository Trust & Clearing Co. (CGSDTC) have signed a Memorandum of Understanding (MoU) to establish a framework for closer co-operation between the companies.
Under the terms of the non-binding agreement, the entities have agreed to explore opportunities for collaboration, such as cross-entity training and other forms of knowledge sharing, to support the development of clearing and settlement practices for the Chinese fixed-income market.
Euroclear Bank Chairman, Frédéric Hannequart, commented: "The tremendous growth in Asia's economies continues to challenge the established US and European capital markets. China, on its own, is about to become the third largest economy in the world and is expected to catch up with Europe as a whole and the US by the middle of the century. Euroclear Bank's longstanding presence and commitment to Asia makes us a natural partner for the CGSDTC, particularly in fixed-income securities processing. We are pleased to forge even stronger ties with a capital market with such promise."
Mr Yuan Zhang, Chairman of the CGSDTC, stated: "China's bond markets are maturing quickly. And continued development is a key part of the future success of China's securities market as a whole. Working together with Euroclear will enable both entities to learn from each other - about our markets, our challenges, our solutions - to better serve the issuer and investor communities. Together, we aim to build on our common goal of an integrated, safe, highly efficient and transparent post-trade infrastructure."
Euroclear has signed similar MoU agreements with the central securities depositories (CSDs) of Russia and India earlier this year. Russia, India and China, as outlined in the BRICs report (1), are expected to become leading world economies by the middle of this century.
(1) The Goldman Sachs global economics team released a follow-up report in 2005 to its initial BRIC study in 2004.