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DTCC inks China deal

ChinaÆs SD&C moves closer to international standards for processing, clearing and settling trades.
ChinaÆs growing custody business took a step closer to achieving international standards with a memorandum of understanding signed between the China Securities Depository and Clearing Corporation Limited (SD&C) and New York-based Depository Trust and Clearing Corporation (DTCC).

The parties have launched an information exchange and cooperation arrangement. This provides the legal and business framework for both organisations to work together and exchange information more freely. The contractual agreement will further bring ChinaÆs securities clearance, settlement and depository capabilities up to world standards, amidst growing institutional and retail stock market participation and initiatives like the qualified domestic institutional investor (QDII) regime.

More specifically, both the DTCC and the SD&C will undertake a cooperative effort on securities and clearing matters, promote cross-border investment and share operational information. The MOU will also aid in the establishment of an operational linkage between the two houses, of which no specific time frame has been set for implementation.

The SD&C, which was formed in 2001 and is supervised by the China Securities Regulatory Commission (CSRC), serves the Chinese capital markets in numerous ways. Its main functions include the establishment and management of securities accounts and settlement accounts, the depository and transfer of ownership of securities and the registration of the register of securities holders as well as the registration of their rights and interests.

Aside from providing clearing and settlement, as well as the relevant management of securities and funds, the SD&C also acts as a distribution of securities rights and interests as instructed by the issuer and providing inquiry, information, consultancy and training services relating to the securities registration and settlement business in accordance with Chinese law.

However, it recent times some believe it has been stretched given the influx of capital investment, making the MOU with DTCC a timely move for SD&C. The relationship will not end with the information sharing agreement, as both parties also expect to work on a series of as yet unnamed projects going forward.

This is the latest announcement in what has become a close relationship between DTCC and China. In December 2006, the first steps towards the more recent MOU were taken with the DTCC and the China Government Securities Depository and Clearing Corporation (CDC) signing a preliminary exchange agreement which will foster cross-border investment through cooperation in depository and clearing operations.

DTCC currently provides custody and asset servicing for around 2.8 million securities issues from the United States and more than 100 other countries, which are presently valued at $36 trillion. In 2006, the DTCC settled more than $1.5 quadrillion in securities transactions globally.
¬ Haymarket Media Limited. All rights reserved.
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