BANGKOK, Feb 3 (Reuters) - Stock exchanges in Malaysia, the Philippines, Singapore and Thailand want to set up trading links between their markets and aim to have cross-border dealing in all their listed shares by the end of this year.
The 10-country Association of South East Asian Nations (ASEAN) wants to establish an economic community modelled on the European Union by 2015 and the market venture will support one of its aims, allowing capital to move more freely between states.
Cross-border trading had been scheduled for last year but was delayed by the development of a new platform, among other things.
However, the four exchanges, working with NYSE Technologies, a division of NYSE Euronext NYX.N), have now completed a study for the technological framework for the ASEAN Trading Link, according to a joint statement.
“The ASEAN Trading Link aims to electronically interconnect the participating markets and facilitate cross-border order trading seamlessly,” it said.
The exchanges of Southeast Asia, including Indonesia and Vietnam, have a combined capitalisation of about $2.4 trillion and were the darlings of emerging market investors last year.
Indonesia .JKSE, Southeast Asia's best performer in 2010, and second-ranked Thailand .SETI saw foreign inflows more than double in 2010 to $2.2 billion and $2.5 billion respectively, according to Thomson Reuters data.
A tender is being held for companies to provide the infrastructure for the ASEAN platform. “Depending on the selected vendor, it is expected that the link will go live toward the end of 2011,” the statement said.
On the new platform, investors will be able to trade shares listed on any participating market through any brokerage that has links with that exchange, a Thai exchange official said.
That will cut the cost of cross-border trading, since now an investor has to go through local brokerages in each country, she said.
The stocks would be quoted in their home currencies on the international platform. “The trading rules will be based on the home exchange rules,” she said.
The platform will increase the options open to investors in the four countries and could boost stock market liquidity.
“As far as I understand, it will not create one unified ASEAN exchange but will allow brokers to internally pass orders from one market to another,” said Andrew Yates, head of international equity sales at broker Asia Plus Securities in Bangkok.
“It may be of use to retail investors. Some retail investors may want to trade on other markets but I would expect the majority still prefer to invest in their own local market, where they have a greater understanding of the listed companies.”
Indonesia and Vietnam would enter the system by 2013, according to the Thai official.
Of the other ASEAN members, Laos opened a stock market in January, Cambodia plans to open one this year and Myanmar is in talks about developing one. Brunei is the remaining member.
For details on the exchanges, click on <ASEAN/EQUITY>. (Editing by Alan Raybould)