1. 1 The Path to ASEAN Capital Market Integration IOSCO Asia-Pacific Regional Committee Melbourne, 23 October 2009

2. Agenda A case for ASEAN financial integration ASEAN Capital Markets Forum’s Implementation Plan to promote the development of an integrated capital market Initiatives under the ASEAN Capital Markets Forum ASEAN & Plus Standards Other initiatives

3. 3 A cogent case for greater integration of the ASEAN financial market  Strengthen financial intermediation, capacity and risk management  Cooperate to reduce vulnerabilities to external shocks and market volatility – a clear lesson learnt from the Asian Crisis of 1997  Provides a greater voice on financial stability and development issues in the global forum  Opportunity to draw the lessons of the crisis for risk management, regulatory surveillance, asset securitisation and market microstructure  Provide the liquidity, scale and capacity to compete globally and manage volatility more effectively  Address pressing policy concerns and calls for a comprehensive strategy in view of growing global competition, growing technological and regulatory changes  Builds awareness of ASEAN as an asset class and enhance the region’s attractiveness for global capital flows

4. ASEAN’s value proposition 4 » Strategic geographical footprint Gateway to Asia’s growth centre » Diverse membership  Mix of developed countries and emerging markets » Population  584mil (9% of global population)  Large consumer market » Strong economic base  ASEAN’s combined GDP of over US$1.5 trillion (‘08), with US$1.7 trillion in trade values  Per capita income grew from US$1,439 to US$2,580 over the past 5 years » Capital market has potential  US$1.1 trillion market capitalisation, with 3000 listed companies  40-45% savings rate  Growing bond market

5. 5 Bali Concord II (Declared in 2003) Provided milestones to reach goals of ASEAN Vision 2020 - established 3 pillars of ASEAN Community: ASEAN Economic Community ASEAN Security Community ASEAN Socio-cultural Community AEC 2015 BLUEPRINT At the 12 th ASEAN Summit 2006, the Leaders agreed to accelerate the establishment of the ASEAN Economic Community by 2015. ASEAN VISION 2020 (Declared in 1997) Leaders articulated four long term goals of ASEAN: ASEAN in concert Partnership in dynamic development Community of caring societies Outward-looking ASEAN The Roadmap on Monetary & Financial Integration of ASEAN (RIA-FIN) ASEAN vision for economic and financial integration ACMF IMPLEMENTATION PLAN 2015 To achieve the goals of the AEC Blueprint 2015 via a set of strategic initiatives and formulating specific implementation actions and milestones. Seeks to achieve significant progress in building a regionally integrated market, where in the region: Capital can move freely Issuers are free to raise capital anywhere Investors can invest anywhere

6. 6 AEC 2015 Blueprint The Blueprint adopts two strategic approaches: Strengthening ASEAN capital market development and integration Allowing greater capital mobility Through achieving greater harmonisation in offering standards, Facilitating mutual recognition, Allowing greater flexibility in language and laws in securities issuance, Enhancing tax structure and Facilitating market linkages Through liberalising capital movements subject to some safeguards mechanism in ensuring that countries have the necessary policy space against potential macro- economic instability Capital flows are defined as i) foreign direct investment, ii) portfolio investment and iii) other types of flows.

7. Agenda A case for ASEAN financial integration ASEAN Capital Market Forum’s Implementation Plan Initiatives under the ASEAN Capital Markets Forum ASEAN & Plus Standards Other initiatives

8. 8 Supported by the ACMF Implementation Plan to promote capital market integration in ASEAN Harmonisation and mutual recognition framework ASEAN exchange alliance and governance framework Promoting new products and building ASEAN as an asset class Strengthening bond markets Align domestic capital market development plans to support regional integration Reinforce ASEAN working processes ACMF Implementation Plan to promote the development of an integrated capital market to achieve the objectives of the AEC Blueprint

9. A mutual recognition and harmonisation framework 9 Harmonise disclosure stds, align distribution timelines and develop MR framework for primary offerings MR of market professionals Allow intermediaries to distribute ASEAN listed products, with marketing support services MR of distribution of CIS/Islamic products Promote cross border investments through local intermediaries Harmonise criteria for NRIs Amend laws/reforms to allow NRI/RI to invest freely MR for the provision of product & services by intermediaries to NRIs Facilitate cross border fund raising Regulatory mapping ; Compliance with relevant IOSCO principles - ASEAN peer review mechanism; Clear and effective communication plan; Strong investor protection regime, remedies/dispute mechanisms for aggrieved investors; Bilateral/Multilateral MOU for enforcement and information-sharing; Phased liberalisation of non-prudential capital account and other restrictions for freer flow of capital. Pre-requisites to the framework Facilitate cross border product distribution Facilitate cross border investments by investors Facilitate market access by intermediaries

10. Supported by trading and settlement linkages 10 ASEAN Board, comprising top 30 companies from each ASEAN markets. Form depository links for cross border settlement and custody ASEAN clearing houses act as central counter party for cross border trades Promote ASEAN as an asset class Demutualisation of exchanges Enhance information sharing and cooperation among exchanges through signing of multilateral MOU for cooperation and information sharing Pre-requisites to strengthen exchange governance Enhance trading efficiency and cost reduction Facilitate cross border trades Build sustainable demand Set up ASEAN Common Exchange Gateway – electronic link for direct access by foreign brokers, as clients of local members ASEAN Marketing Committee to develop comprehensive marketing plan, including investor education, marketing, news and data dissemination.

11. Accelerating on-going initiatives 11 Accelerate reform initiatives in bond issuance, listing and distribution Strengthen regional rating agencies Improve clearing and settlement of bonds Strengthen regional bond markets Promote and incentivise regional product developments Promote ASEAN star companies under ASEAN Board Promote new products and build ASEAN as an asset class Align domestic capital market development plan to support regional integration Strengthen coordination and monitoring process at both the regional and country levels to support the implementation

12. Agenda A case for ASEAN financial integration ASEAN Capital Market Forum’s Implementation Plan Initiatives under the ASEAN Capital Markets Forum ASEAN & Plus Standards Other initiatives

13. 13 Harmonisation of ASEAN Disclosure Standards Prior to the development of the Implementation Plan, ACMF had initiated following key works : Harmonising disclosure standards for cross-border equity and debt offerings; Harmonising distribution rules and approval timelines; Cross-recognition of qualification, education & experience of market professionals; Convergence of accounting & auditing standards with IFRS s and ISAs. In October 2008, ACMF released a set of harmonised ASEAN and Plus Standards for equity and debt securities offerings. Malaysia, Singapore and Thailand have implemented the ASEAN and Plus Standards for cross-border offering of securities in ASEAN.

14. Harmonisation of ASEAN Disclosure Standards To encourage cross-border offerings in ASEAN by: Bringing ease and cost savings to issuers making multi-jurisdiction offerings within ASEAN. Enhancing the attractiveness of ASEAN as a combined capital market for fund-raising To encourage ASEAN member countries to work towards the adoption of international best practices in disclosure standards. Objective Applies to all issuers, ASEAN and non-ASEAN alike, making offerings within ASEAN. For multi-jurisdiction public offerings within ASEAN of equity and debt securities. Scope

15. 15 Harmonisation of ASEAN Disclosure Standards Plus Standards ASEAN Standards A set of common ASEAN standards for disclosure Based on IOSCO’s International Disclosure Standards for Cross-Border Offerings and Initial Listings by Foreign Issuers (1998); and IOSCO’s International Disclosure Standards for Cross-border Offerings and Listings of Debt Securities by Foreign Issuers (2007) Fully adopts accounting and auditing standards of the IFRS and ISA Additional requirements prescribed by individual members Plus Standards to be eventually phased out +

16. 16 THANK YOU