28 September 2010
ASEAN+3 Forum Discusses Harmonizing Asia's Bond Markets
MANILA, PHILIPPINES - The ASEAN+3 Bond Market Forum (ABMF) met for the first time today in Tokyo, Japan to discuss how best to harmonize regulations and market practices in Asia’s local currency bond transactions.
The ABMF is largely made up of financial experts from the 10 countries of the Association of Southeast Asian Nations (ASEAN), plus the People’s Republic of China, Japan and the Republic of Korea. It aims to establish regional market standards and common practices to make cross-border bond investment and settlement both smoother and cheaper.
The local currency bond markets in emerging East Asia have grown steadily in recent years, with $4.8 trillion in bonds outstanding at the end of June 2010. However, cross-border transaction costs in the region are high at an estimated three times more than in developed markets.
Common trading standards would make it faster and cheaper for investors from across the region to dip in and out of their neighboring markets. A wider variety and larger number of investors in Asia’s bonds would also make the markets more efficient and thus a better place for borrowers to raise funds.
“The forum is a big step towards institutionalizing regional cooperation and should help integrate Asia’s bond markets,” said Noritaka Akamatsu, Deputy Head of the Asian Development Bank’s (ADB) Office of Regional Economic Integration. “Ultimately, an integrated Asian bond market would benefit issuers and investors not only in Asia but also in the rest of the world.”
As a first step, the ABMF will create two sub-forums. One will collate and compare regulations and market practices in the region, while the second will look to harmonize transaction procedures and bond messaging formats with a view to cutting the cost of cross-border deals.
The forum was set up on the recommendation of a Group of Experts consisting of leading public and private sector institutions, including national central securities depositories from ASEAN+3 countries, international central securities depositories, global and regional custodians, and the ADB. It was endorsed by finance ministers of ASEAN+3 when they met in Tashkent, Uzbekistan in May.
The Group of Experts and the ABMF are part of ASEAN+3’s Asian Bond Markets Initiative (ABMI) aimed at fostering cross-border bond transactions. The ABMI was set up by the ASEAN+3 Finance Ministers in 2003 to develop local currency bond markets and to channel Asian savings into the region.
For more information, go to the ABMF Website: http://asean3abmf.adb.org
About ADB
http://www.adb.org/Media/Articles/2010/13340-asian-bond-markets/
