Clearstream to sign first Asian partner for Link Up Markets

Signing dealClearstream's project to harmonise the world's post-trade infrastructure is close to signing a deal with Singapore, its first Asian partner, Funds Europe has learned.

Singapore's central securities depository (CSD) will be the eleventh member of the Link Up Markets project, which was founded in 2008 to tie together European CSDs. It will follow South Africa and Egypt, the two other non-European countries to have joined so far.

Clearstream, the clearing and settlement division of Deutsche Börse, has yet to announce the news, but Irene Mermigidis, managing director of Link Up Markets, did explain that the benefits for non-European members were access to 50% of the European market and the potential to become a gateway into Europe for their own region.

New members could also learn from the experience of existing members and evolve to the same standard as European CSDs.

The Singapore deal may intensify the country's rivalry with Hong Kong to be a financial entry point to Asia. Hong Kong also has a pilot project to improve links between CSDs, but it is working with Clearstream's rival, Euroclear. A task force led by Hong Kong and Malaysia is trying to create a common post-trade environment for bonds in Asia, with Euroclear's assistance.

It is unclear whether there will be any more new members for Link Up Markets in the near future. Mermigidis said her priority is not to recruit new CSDs but to prepare the original European members for Target2-Securities, an IT platform that will consolidate settlement of bonds and equities in Europe and go live in 2015.

Mermigidis accepted that many non-European CSDs were waiting to see how things go in Europe before making decisions about getting involved in these kind of cross-border projects.

“Of course, having new members is important but the existing members that have already invested in Link Up Markets did that for a purpose and that was to help them in view of the Target2-Securities challenge,” she said.

©2012 funds europe