New rules for the registration and settlement of debt securities in Macau
João Nuno Riquito and Daniel de Senna Fernandes of Riquito Advogados explain the recent changes regarding the debt securities market in Macau as the region pursues further integration in the Greater Bay Area
Following the launch of the Macau SAR’s central securities depository system run by the Macau Central Securities Depository and Clearing Limited (MCSD) in April 2022, the MCSD appointed the Bank of China Limited Macau Branch and the Industrial and Commercial Bank of China (Macau) Limited as settlement institutions that bond issuers may designate to perform settlement services for bonds, including subscription, trading, interest payment, and redemption.
Despite only recently being set in motion, the Macau SAR’s bond market is quickly evolving. A new guideline on the registration and settlement of debt securities, including bonds and negotiable certificates of deposit, published by the Monetary Authority of Macau (AMCM) has recently come into force. The guideline strengthens the existing rules and regulations while also promoting the development of an efficient and reliable financial market in the Macau SAR.
Unsurprisingly, this new guideline is in line with the Macau SAR’s plans to promote economic diversification and sustainable development, as the Policy Address for the Fiscal Year 2022 published by the Macau SAR government highlighted the importance of furthering the region’s integration in the Greater Bay Area while building a modern and robust financial market.
Main points of the guideline
According to that guideline, MCSD, a company fully owned by AMCM, shall provide all services related to the centralised registration, custody, and settlement of all debt securities, including:
The establishment and management of debt securities accounts and participant accounts;
The custody and transfer of debt securities;
The registration of debt securities holders and their rights and interests;
The clearing and delivery of debt securities and funds, and the relevant management;
The distribution of rights and interests as entrusted by the issuers; and
The provision of information to inquiries on the registration and settlement of debt securities.
Issuers interested in registering issued debt securities and investors wishing to hold debt securities should open an account with MCSD, which will be kept updated at all times in accordance with the relevant laws and regulations and operational rules, while also recording the balance of debt securities held by any account.
In light of the aforementioned, when debt securities are transferred by means of agreement, inheritance, donation, compulsory enforcement, or administrative allocation, or when debt securities are pledged, locked, or frozen, leading to limitations on the rights of the holders, MCSD will register or mark them accordingly.