Liberalisation bodes well for ASEAN capital markets

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Bursa MalaysiaThe liberalisation of ASEAN capital markets is making great strides this year. This bodes well for companies throughout the region and, consequently, for ASEAN’s total GDP. This is one of the key elements of the ASEAN Economic Community blueprint to form an integrated ASEAN market by 2015, and it is coming along nicely.

In April 2013, a coalition of regulators from each ASEAN country called the ASEAN Capital Markets Forum (ACMF) agreed on a set of common capital markets disclosure standards for cross border offerings of securities. This means that, for instance, a company in Singapore that wants to sell shares in Malaysia no longer has to hire a Malaysian broker and file a prospectus in Malaysia. There will, instead, be one central authority for the filing of prospectuses and all other disclosure and regulatory requirements.

A common capital market will allow ASEAN and non-ASEAN issuers of securities to efficiently pool the resources of ASEAN investors by making multi-jurisdiction offerings of equity and plain debt securities to all ASEAN countries in one fell swoop. This means that domestic ASEAN companies will be able to find investors much more cheaply and easily than has ever been possible before. This would ideally make the ASEAN region much more like the euro zone, but without a single currency.

Thailand, Malaysia, and Singapore have already implemented the common standards scheme. The scheme operates on an opt-in basis, so that countries can join when they are ready. The reason that Thailand, Malaysia, and Singapore joined so quickly is that their capital markets rules were already very similar to those called for under the common scheme.

A common disclosure standard does not, however, mean that all rules and regulations regarding securities offerings will be homogenized throughout the region. That might be the eventual outcome of this drive towards capital markets liberalization, but it not yet being proposed. Therefore, investors in each jurisdiction will have to rely on the remedies provided under their particular jurisdiction’s laws in order to take action against an issuer in the event of a breach. An issuer of securities will still have to comply with the laws of each of the jurisdiction where the offering is made. Similarly, regulators in each jurisdiction will have to follow the unique laws of their jurisdiction when taking action against issuers.

This heightened level of capital markets integration is a step in the right direction and seems certain to boost development and GDP growth. A further step would be to homogenise enforcement regulations to provide investors and issuers with a better sense of certainty and thus more confidence. ASEAN nations would, however, need to accept the loss of a degree of sovereignty that that would entail.

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Reading Time: 2 minutes

The liberalisation of ASEAN capital markets is making great strides this year. This bodes well for companies throughout the region and, consequently, for ASEAN’s total GDP. This is one of the key elements of the ASEAN Economic Community blueprint to form an integrated ASEAN market by 2015, and it is coming along nicely.

Reading Time: 2 minutes

Bursa MalaysiaThe liberalisation of ASEAN capital markets is making great strides this year. This bodes well for companies throughout the region and, consequently, for ASEAN’s total GDP. This is one of the key elements of the ASEAN Economic Community blueprint to form an integrated ASEAN market by 2015, and it is coming along nicely.

In April 2013, a coalition of regulators from each ASEAN country called the ASEAN Capital Markets Forum (ACMF) agreed on a set of common capital markets disclosure standards for cross border offerings of securities. This means that, for instance, a company in Singapore that wants to sell shares in Malaysia no longer has to hire a Malaysian broker and file a prospectus in Malaysia. There will, instead, be one central authority for the filing of prospectuses and all other disclosure and regulatory requirements.

A common capital market will allow ASEAN and non-ASEAN issuers of securities to efficiently pool the resources of ASEAN investors by making multi-jurisdiction offerings of equity and plain debt securities to all ASEAN countries in one fell swoop. This means that domestic ASEAN companies will be able to find investors much more cheaply and easily than has ever been possible before. This would ideally make the ASEAN region much more like the euro zone, but without a single currency.

Thailand, Malaysia, and Singapore have already implemented the common standards scheme. The scheme operates on an opt-in basis, so that countries can join when they are ready. The reason that Thailand, Malaysia, and Singapore joined so quickly is that their capital markets rules were already very similar to those called for under the common scheme.

A common disclosure standard does not, however, mean that all rules and regulations regarding securities offerings will be homogenized throughout the region. That might be the eventual outcome of this drive towards capital markets liberalization, but it not yet being proposed. Therefore, investors in each jurisdiction will have to rely on the remedies provided under their particular jurisdiction’s laws in order to take action against an issuer in the event of a breach. An issuer of securities will still have to comply with the laws of each of the jurisdiction where the offering is made. Similarly, regulators in each jurisdiction will have to follow the unique laws of their jurisdiction when taking action against issuers.

This heightened level of capital markets integration is a step in the right direction and seems certain to boost development and GDP growth. A further step would be to homogenise enforcement regulations to provide investors and issuers with a better sense of certainty and thus more confidence. ASEAN nations would, however, need to accept the loss of a degree of sovereignty that that would entail.

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