Friday, September 22, 2017

KBZ launches Yangon stock exchange settlement system

Kanbawza Bank signed yesterday with the Yangon Stock Exchange (YSX) to run settlement and clearing operations for Myanmar’s first modern bourse.

Myanmar’s flag flies above the new Yangon Stock Exchange building. Photo: Naing Wynn Htoon / The Myanmar TimesMyanmar’s flag flies above the new Yangon Stock Exchange building. Photo: Naing Wynn Htoon / The Myanmar Times

Last April the bank was chosen from among six local private banks who applied for the role to the Securities and Exchange Commission (SECM) of Myanmar. It will be responsible for delivering payments for the sale of stocks, once trades have been agreed on.

If the broker or dealer representing the buyer cannot immediately make a payment, it will be KBZ’s responsibility to provide the funding short-term.

The bank has the widest network among private banks and has the digital integration necessary for a settlement bank, officials said.

The SECM earlier said it plans for the Yangon Stock Exchange to use a modern Delivery Versus Payment system, where the cash payment to the seller comes before or at the same time as the security goes to the buyer.

The settlement bank must ensure it has sufficient liquidity to support these transactions and the infrastructure in place to complete exchanges, including digitally linking to different trading and banking systems.

KBZ senior managing director U Nyo Myint said the company has been preparing its IT infrastructure for the past eight months and is ready to launch the system. “We will work as a service provider together with the 10 securities companies to offer a fast and accurate service with full security,” he said.

The bank will offer payment and settlement services while the YSX will manage the transfer of securities, U Nyo Myint said. “We have built a custom network comprising Daiwa’s technology and our IT infrastructure,” he said.

The exchange is 49 percent owned by two Japanese companies – Japan Exchange Group, the operator of Tokyo Stock Exchange and Daiwa Securities Group, which signed an agreement with state-owned Myanma Economic Bank (MEB) on December 23, 2014.

According to YSX officials, one more bank may be granted a licence to operate as a settlement bank at a later stage, depending how quickly the market develops and matures.

A KBZ subsidiary, KBZ Stirling Coleman was the first of the 10 securities firms to receive a licence. AYA Trust Securities, CB Securities and the Myanmar Securities Exchange Centre have also received licences and launched their services, while the other six companies are still preparing.

KBZSC is working with First Myanmar Investment and Myanmar Thilawa SEZ Holdings to prepare the companies to debut on the exchange.

While the exchange launched at the end of last year, no companies have yet listed.