“Seamless” Eurobond liquidity around the clock, and a strengthened service offer to Asian and Pacific issuers – these are the intended benefits as Europe’s two international CSDs appoint China Construction Bank as its first Chinese partner with a “common depository” status.
Clearstream Banking and Euroclear Bank are Europe’s two international central securities depositories, ICSDs. They work jointly as the central hub of issuance and deposit for their international debt securities, known as Eurobonds. And now China Construction Bank – listed as the world’s second largest bank by assets – is joining its network of actors who are entitled to offer services “as common depository, safekeeper and service provider” on the basis of their international settlement platform.
Their press release describes the agreement as a “geographic extension of the network”, with China Construction Bank being its first PRC-based participant.
Good way to start the day
“Leveraging Asian operations of common depositories facilitates primary market activities, including syndicated distributions, from the start of the business day in Asian markets allowing more efficient use of cash and securities. Likewise, it allows a closer connection to the APAC issuance and investor communities for a more efficient servicing of the securities throughout their life cycle,” states the press release.
“CCB (Asia)’s aim is to broaden the Eurobond market to reach more APAC market participants – especially new issuers and investors from the People’s Republic of China, says Alan Lai, China Construction Bank (Asia)’s head of transaction banking.
To describe the point of their own operations model, the ICSDs state that “issuers benefit from greater investor reach by leveraging the ICSDs’ international client bases and multi-currency model. This international issuance model is supported by an interoperable link allowing clients to settle cross-border transactions seamlessly throughout the day, thereby increasing the liquidity available to market participants”.
Existing common suppliers in Clearstream’s and Euroclear’s network are the following:
Bank of America London, Banque Internationale à Luxembourg, Banque et Caisse d’Epargne de l’Etat Luxembourg, BNP Paribas Securities Services Luxembourg Branch, CACEIS Bank Luxembourg, Citibank Europe Dublin, DBS Bank Singapore, Deutsche Bank AG Frankfurt, Deutsche Bank AG Hong Kong, Deutsche Bank AG London, Elavon Financial Services Dublin, Hongkong and Shanghai Banking Corporation Hong Kong, HSBC Bank London, Mizuho Trust & Banking Luxembourg, MUFG Bank London, Société Générale Luxembourg and The Bank of New York Mellon London.
Main image: Hong Kong – home to CCB (Asia). (Photo: Ruslan Bardash / Unsplash)