Korea Capital Market Institute

There has been a greater need to develop Asia's bond markets that can absorb the regional savings glut since Asian nations suffered from two financial crises. To serve this purpose, Asian nations have pushed forward with the Asian Bond Markets Initiative(ABMI).

Asian countries need to coordinate and integrate regional bond markets through standardized cross-border bond issues and transactions. For the Asian Bond Standard, an Asian SRO (Self Regulatory Organization) that responds to rapidly changing market conditions is necessary. The SRO needs to be able to cope with diverse demands from bond issuers, investors, and market participants.

This report sheds light on the current status of SROs in major Asian nations, and then presents how to revitalize self-regulations and facilitate cooperation among SROs in the Asian cross-border bond markets. By doing so, we attempt to review what role an Asian SRO should play in developing cross-border bond markets in the region.

Taking account of the differences in regulations and market development stages across Asian nations, a market-oriented self regulation for the Asian cross-border bond market is preferable. If deemed necessary in the future, Asia may need to establish a independent body called Asian SRO, an regional organization similar to Europe's ICMA, that will be responsible for self-imposed controls, and devising standard rules and  regulations for cross-border transaction in the whole Asian bond markets.

In order to establish an Asian SRO, each government of ASEAN+3 member nations should provide regulatory support, and SROs in Asian bond markets should strengthen closer cooperation.