TDCC and Euroclear partner for int'l bond market
By Ted Chen, The Chine Post
April 4, 2014, 12:10 am TWN
TAIPEI, Taiwan -- The Taiwan Depository & Clearing Corporation (TDCC) yesterday held a press event with Euroclear, and Citibank Taiwan, announcing an international service to allow foreign investor to directly acquire Taiwan's fledgling Formosa Bonds.
The partnership between Euroclear, the largest international central securities depository in world based in Belgium, and Citi Bank, as the agent financial institution, will enable foreign investors, including central banks and large scale banks and enterprises, to purchase Formosa Bonds via their existing Euroclear accounts.
According to Central Bank Deputy Governor Yang Chin-long (楊金龍), the development will contribute towards bridging the gap between Taiwan and the international markets while expanding the local market for international bonds, which are in line with the policy objectives of establishing a sound payment ad settlement system. Most notably, Yang remarked that Taiwan's renminbi-denominated deposits have breached the 250-billion-yuan mark since the last tally in February, and is expected to continue rising rapidly. According to Yang, the partnership will help propel Taiwan's development towards a major regional hub for offshore renminbi clearing, by providing a clearing platform for the locally issued Formosa Bonds with improved safeguarding mechanisms and efficiency.
Yang explained that the partnership with Euroclear represents a significant milestone in Taiwan's international bond market since the establishment of an automated delivery-versus-payment (DVP) clearing mechanism in 1999, following the beginning of efforts by the Ministry of Finance and the Central Bank to link the Bills Central Depository and Clearing System with the Central Bank's Interbank Funds-Transfer System. Currently, the thriving TDCC handles a daily average volume of NT$330 billion for bills and bond
Lieve Mostrey, Euroclear Chief Technology and Service Officer, stated that the renminbi now represents a 40-percent portion of all foreign bonds held among international and company's investors' accounts. Mostrey stated that Euroclear is elated to take part in the momentous milestone in the development of Taiwan's Formosa Bonds.
TDCC Chairman Calls for Pact Approval
Meanwhile, TDCC Chairman Ding Kung-wha stated that the finalization of legislative approval for the Cross-Strait Trade in Services Agreement is expected to pave the way for the arrival of an estimated 100 billion yuan worth of investments from foreign institutional investors. In addition, Ding stated that with a depository volume exceeding US$33 trillion, the partnership with Euroclear is expected to help Taiwan attract international investors seeking renminbi-denominated bonds and derivatives.
A similar partnership between Taiwanese and European clearing and depository services is poised to see fruition later this month, following a signing ceremony between the TDCC and Clearstream, the second largest depository in Europe.