Clearstream builds bridges to the east
16 June 2016 Frankfurt
Image: Shutterstock
Post-trade services provider Clearstream is looking to be first at the gate to take full advantage of the opening of the Chinese capital markets, according to its monthly report.
The Deutsche Börse subsidiary is “working on several initiatives to support” the development of Asia’s largest financial market, including exploring options to provide access to onshore Chinese Yuan (RMB) products for its customers.
Clearstream noted in its report that significant progress has already been made in forging relationships between Europe and China, such as the International Monetary Fund’s decision to include RMB in its special drawing rights reserve currency basket, with a weighting of 10.92 percent, the third highest weighting after the US dollar (USD) and euro, according to the Clearstream.
The report suggested that central banks and other investors are expected to shift parts of their assets to China as a result of these developments.
The international central securities depository (ICSD) is also is currently in the process of developing a link to the Chinese interbank bond market (CIBM), the third biggest fixed income market in the world with over $7 trillion outstanding, according to Clearstream.
The initial stage of this linkage, which is set to go live later this year, will allow eligible international investors to benefit from a simple ICSD method to access sought-after onshore RMB-denominated fixed income assets.
Clearstream is currently the sole ICSD to offer settlement and custody services of China A-shares listed at Shanghai Stock Exchange via the Shanghai-Hong Kong Stock Connect scheme.
This service will be enhanced on 4 July to allow Clearstream customers to benefit from true delivery versus payment settlement via the linkage.
“This is also due to the high likelihood that RMB-denominated China A-shares will be included in the MSCI and FTSE benchmark indices”, said Clearstream chairman and member of the Deutsche Börse executive board Jeffrey Tessler.
Likewise, Chinese bonds are expected soon to join some global emerging market indices, added Clearstream.
“China has been a crucial part of Deutsche Börse’s strategy for a long time now, and we have had a strong presence in Asia for many years”, Tessler added.
“I think it’s clear that we’re currently in the midst of a rare convergence of both internal reform of the onshore Chinese market and international recognition of the importance of the RMB. From a domestic perspective, there’s been a flurry of progress in liberalisation reforms over the last twelve months. This has been mirrored by moves internationally to increase the global role of the RMB.”
The Deutsche Börse subsidiary is “working on several initiatives to support” the development of Asia’s largest financial market, including exploring options to provide access to onshore Chinese Yuan (RMB) products for its customers.
Clearstream noted in its report that significant progress has already been made in forging relationships between Europe and China, such as the International Monetary Fund’s decision to include RMB in its special drawing rights reserve currency basket, with a weighting of 10.92 percent, the third highest weighting after the US dollar (USD) and euro, according to the Clearstream.
The report suggested that central banks and other investors are expected to shift parts of their assets to China as a result of these developments.
The international central securities depository (ICSD) is also is currently in the process of developing a link to the Chinese interbank bond market (CIBM), the third biggest fixed income market in the world with over $7 trillion outstanding, according to Clearstream.
The initial stage of this linkage, which is set to go live later this year, will allow eligible international investors to benefit from a simple ICSD method to access sought-after onshore RMB-denominated fixed income assets.
Clearstream is currently the sole ICSD to offer settlement and custody services of China A-shares listed at Shanghai Stock Exchange via the Shanghai-Hong Kong Stock Connect scheme.
This service will be enhanced on 4 July to allow Clearstream customers to benefit from true delivery versus payment settlement via the linkage.
“This is also due to the high likelihood that RMB-denominated China A-shares will be included in the MSCI and FTSE benchmark indices”, said Clearstream chairman and member of the Deutsche Börse executive board Jeffrey Tessler.
Likewise, Chinese bonds are expected soon to join some global emerging market indices, added Clearstream.
“China has been a crucial part of Deutsche Börse’s strategy for a long time now, and we have had a strong presence in Asia for many years”, Tessler added.
“I think it’s clear that we’re currently in the midst of a rare convergence of both internal reform of the onshore Chinese market and international recognition of the importance of the RMB. From a domestic perspective, there’s been a flurry of progress in liberalisation reforms over the last twelve months. This has been mirrored by moves internationally to increase the global role of the RMB.”
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