The Hong Kong Monetary Authority and China Government Depository Trust & Clearing Co. Ltd have agreed to establish a direct Central Securities Depository Link to foster cross-boundary debt securities settlement.

The authority's Chief Executive Joseph Yam welcomed the move, adding that the joint effort represents another step forward in cooperation between Hong Kong and the Mainland.

The one-way link will run from the Mainland's Government Securities Book-Entry System to the authority's Central Moneymarkets Unit.

China Government Depository Trust & Clearing members - including banks, trust companies and other financial institutions in the Mainland that are authorised to invest in foreign debt securities - may settle and hold Hong Kong and foreign debt securities through the company's account with the unit.

New link offers safe, cost-effective acccess

The authority's Deputy Chief Executive Norman Chan, who signed the agreement with the company's chairperson Wang Chun in Beijing today, said the new link greatly improves access for Mainland investors to debt securities outside the Mainland in a safe and cost-effective manner.

The authority's Central Moneymarkets Unit offers a safe, convenient and efficient clearing, settlement and custodian system for debt instruments lodged in the unit.

The outstanding value of debt securities lodged with the unit is $338 billion, about 60% of total outstanding amount of Hong Kong dollar debt securities.

Through the existing central securities depository links, domestic and foreign investors hold debt securities worth $24 billion.