New rules for new markets

At the end of 2006, the HKMA and Bank Negara Malaysia established a cross-border payment versus payment link between Hong Kong's US dollar real-time gross settlement (RTGS) system and Malaysia's ringgit RTGS system. This latest move will see the acceptance of securities issued in both countries in real time as early as next year.

The idea was first mooted seven years ago by the governments of the Association of South Asian Nations (Asean) plus China, Japan and Korea. The central banks of Malaysia and Hong Kong have set up a separate taskforce to launch their own common platform.

The HKMA and Bank Negara Malaysia have formed a task force in collaboration with international central securities depository Euroclear, to explore "practical actions to address the same issues" that have been stated in a blueprint by the Asian Bond Market Initiative, a project that was endorsed in 2003, according to Risk.net.

Elsewhere, the US Securities and Exchange Commission approved a new set of rules that will establish stock-by-stock circuit breakers for the US cash equities markets, reports Waters Technology.

The regulator expects the Financial Industry Regulatory Authority and the self-regulatory organisations (SROs) to begin implementing the new rules as early as June 11.

Under the new regulations, if a price of a selected stock moves 10% or more in a five-minute period compared with the previous five-minute period, the circuit breaker would begin to cease trading in that issue. After a yet-undefined time, trading in the stock would resume in a fair and orderly manner, said SEC officials.

The SEC plans to have the new rules operate in a pilot process, which will last until December 11. This should give the affected markets time to make the necessary changes to their infrastructure, according to an SEC official.

The first stocks to be affected by the new circuit breaker rules will be the components of the S&P 500 Index. However, on the completion of the pilot, the SEC would like to expand the coverage to include various other securities, including exchange-traded funds.