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Exploring the Potential of China and the Asian Financial Markets

By Corinne Lee and Joe King | December 16, 2019

Exploring the Potential of China and the Asian Financial Markets
Mike Bodson, DTCC President and CEO, addressing attendees at the fourth annual DTCC Asia Executive Council meeting.

Expanding opportunity. Encouraging investment. Ensuring smooth-running post-trade infrastructure.

Those were just a few topics that Mike Bodson, DTCC President & CEO, touched on during a recent visit with senior industry executives in APAC during the fourth annual DTCC Asia Executive Council meeting.

Bodson reinforced DTCC’s commitment to the region, noting DTCC’s presence for 35 years, and shared his views on the Asian financial markets, post-trade environment and regulatory framework. Not surprisingly, much of the discussion at the half-day event focused on China and opportunities for investment in the “economic giant in Asia,” as he described it.

China’s solid economy and huge market provide strong incentives, but potential investors may be more comfortable after China adopts global standards and best practices, as well as processes that make it easier to trade across borders. DTCC is collaborating with organizations including Korea Securities Depository, Hong Kong Exchange and China Foreign Exchange Trading System on best practices and technology.

Key points from Bodson’s opening comments and a panel discussion are below:

Best Practices & Global Standards

“China is the economic giant in Asia with a solid economy and strong GDP growth. In past years, financial firms looked closely at China and made entries into the marketplace there, but in some ways, they seemed reluctant to make long-term commitments. One of the things that DTCC is very focused on in China is helping to establish global standards and best practices in the marketplace. We believe this work will be very beneficial to the market. Our initial work in Institutional Trade Processing has made access easier, but there is still work to do in that area. We continue to make progress working with local infrastructure providers in the country.”

Opportunities and Challenges of Investing in China

“We’re all working toward the same goals of expanding opportunity while ensuring we continue to have the safest, most stable global markets possible. Our goal at DTCC is to ensure a smooth-running, efficient and resilient post-trade infrastructure for cross-border inflow into China from the global investment community and cross-border outflow from qualified domestic institutional investors. With the volumes of trade and money involved, firms want to be free of the hassle of managing trade exceptions, failed trades and monitoring transactional activities given that securities in China are settled on the trading day, T+0. With this in mind, DTCC continues to have ongoing discussions with industry bodies and market infrastructures in China to establish connectivity with our central matching platform (DTCC CTMTM) to enable post-trade straight-through processing for institutional trades. This will allow us to bring global standards and best practices to China, enabling our global clients to enjoy the same level of our service as they have in other key financial markets and easing concerns of doing business in China.”