Under the arrangement, CDP and KSEI will provide reciprocal custodial services for the settlement of foreign securities transactions by their respective participants. In the meantime, both parties are studying each other's systems and practices to further the co-operative effort. When final agreement on the terms is reached, CDP and KSEI will open an account with each other.
KSEI will open an omnibus account with CDP to custodise Singapore securities for Indonesian investors, while CDP will maintain an account with KSEI to hold Indonesian shares. This means that investors can choose to hold their securities directly with KSEI or CDP, or through a custodian bank.
The link is expected to be available in the first quarter of 2001.
President Director of KSEI, Mr Erry Firmansyah, notes that "This link is a significant step towards fostering closer co-operation among regional markets. Investors in our markets will benefit from this arrangement as cross-border trades can be settled without the need for a third party intermediary. This is the first step for us to link with an overseas market, and we hope that we can invite other depositories within the region to join."
President of the Singapore Exchange, Mr Ang Swee Tian, said "We are pleased to forge this relationship with KSEI, which shares our vision of a networked Asian market offering Asian securities. Such a bilateral link to facilitate cross-border securities settlement is, in our view, a suitable framework for the development of an efficient linkage in the region."
