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.