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Updated Tuesday, November 11, 2008 10:28 am TWN, dpa

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Singapore calls for Asia stock market

SINGAPORE -- The Singapore Exchange (SGX) has proposed the creation of an integrated Asian stock market, its chief executive officer Hsieh Fu Hua said Monday.

He called on the ASEAN Exchanges and Central Securities Depositories (CSDs) to forge links that can be extended to the entire Asia-Pacific region. “These multilateral gateways in trading, clearing and settlement will then help us create a single and more significant Asian marketplace,” he said at the 12th general meeting of the Asia-Pacific Central Securities Depository Group in Singapore.

Hsieh said that exchanges in member states of the Association of South-East Asian Nations were currently exploring electronic links and creating an ASEAN trading board, which will be a bulletin board that will initially feature 30 stocks from each of the exchanges.

“The objective is to profile the best stocks from each exchange and market ASEAN as an asset class,” he told the meeting.

Investors in each of the markets will be able see this aggregated trading board of ASEAN stocks and be able to trade through their own local brokers, who will then carry out the trade through a corresponding broker in the home market responsible for the primary listing, Hsieh explained.

The rules of each market will continue to apply on its own slate of stocks, which aims to retain liquidity in the home market, he pointed out. He also disclosed that SGX has proposed that the trading board be accompanied by clearing and depository links as well, which will enable better management of risks and settlement failures.

Hsien said that each clearing house should present to its foreign counterparts a much lower risk profile than individual local brokers, which will reduce costs for overseas brokers, who will only need to build back-office infrastructure in their home markets.

“Hence, the creation of multilateral clearing links is a natural precursor to the integration of trading platforms, paving the way for a more liquid, lower risk and cost-efficient integrated Asian market,” he said.

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