Asiaclear, the clearance and settlement system that will supposedly revolutionize the region's bond markets, is an idea that refuses to die. It has been debated at Asian Development Bank (ADB) meetings since the early 1990s and cropped up again at last month's gathering in Fukuoka.
However, there have been new developments. HongkongBank has registered Asiaclear as a trademark, according to Tomoo Hayakawa, a former treasurer of the Asian Development Bank, now president of the Asia Finance and Investment Corp.
Will this mean a large, well-capitalized bank will do for Asiaclear what JP Morgan did for Euroclear in 1968? Not exactly. Hayakawa - who sometimes credits himself with founding Asiaclear - was not happy with HongkongBank. He accused HSBC chairman, Sir William Purves, of registering the trademark "quietly and secretly" in November 1992.
Hayakawa says Purves heard about Asiaclear after lunching with him - and nearly jumped out of his chair with excitement. Purves then registered the name with the intellectual property department in Hong Kong. This, Hayakawa adds, was never his intention; the name was supposed to be "commonly held" for all of Asia and not registered by one bank.
Hayakawa also says he tried to get Purves to give up ownership of "Asiaclear" on several occasions - most recently at a reception in the Congress Library in Washington during the IMF meeting in 1996.
Such accusations receive short shrift from Purves, who tells Euromoney Hayakawa has "strongly-held personal views on all this". He adds: "I keep telling him what the position is. Several years ago the bank registered Asiaclear to protect the name for Hong Kong. Hayakawa thinks it is something that should be available to him personally and should be released.
"I met him in October in Washington and I simply repeated what I've said to him in my office about five times. I've made it clear that if a group of corporations and the HKMA [Hong Kong Monetary Authority] want to set up Asiaclear it will be made available free of charge. I wrote to the HKMA last month to make this position clear."
It is one of the stranger incidents in Asiaclear's five-year history. But it may prove a fitting final chapter if, as some hope, the Asiaclear debate is finally killed by the groundswell of common sense that is forming.
The Asia-wide settlement system has never been known as anything else than Asiaclear. "I'm not sure who originated the term Asiaclear," says Charles Coe, manager of the financial sector and industry division at the ADB. "But I suspect there will be a strong desire by governments to use that term."
Its attraction is that it mirrors the most successful clearing system, Euroclear. While it may be a matter of historical fact that the "Euro" prefix of Euroclear denotes the 1960s' coinage for offshore dollars, there are many regionalists in Asia who prefer to draw more geopolitical conclusions. And if Europe has a system called Euroclear, surely Asia needs one too?
It is no surprise that Purves acted to secure the name for Hong Kong. Hong Kong has always been Asiaclear's most active promoter. At the Apec meeting of Asian finance ministers this year it was agreed that serious examination of Asiaclear was again required. As is common at Apec meetings, a sponsoring member agreed to take the lead. Hong Kong stepped forward. The HKMA's chief executive, Joseph Yam, is a keen advocate of Asiaclear.
At the 1996 ADB meeting in Manila he told his fellow delegates: "An Asiaclear system to clear Asian and international bonds in the Asian time zone with greatly reduced settlement risk is now a distinct possibility. Asian financial markets would then become a lot more attractive to investors within and outside this region. The ADB, as the premier financial institution and bond issuer in the region, should explore and support the development of Asiaclear."
Coming of age
One year on, not much had happened. Yam's tack at the 1997 meeting in Fukuoka again emphasized Asiaclear's coming of age - this time in numbers. "The share of bonds in financing the needs of [Asian infrastructure] will grow from 9%-26% by 2004," he told an audience of ADB delegates.
"The share of bank borrowing [in Asia] is expected to decline from 40% to 30% over the same period."
Since both statistics point to a bigger Asian bond market, it followed that financial infrastructure like Asiaclear must follow. Yam encouraged ADB president Mitsuo Sato to focus more attention on financial sector projects. It is suspected that Yam's motives are not simply those of a good pan-Asian. The Asiaclear system would be good for Hong Kong, as Asia's leading financial centre. Some bits of it may even be housed there.
But will anything come of all this lobbying? "Every time you go to a conference people talk about the need to develop Asiaclear," says one Hong Kong-based banker. "And then nothing comes of it."
The scepticism is warranted. Five years of chat and no action does not bode well. The original idea was a by-product of the Dragon bond market. These were bonds issued in Asian hours, listed in Asia and (supposedly) traded in Asia. By 1995 a total of $8.5 billion had been issued. Then the Dragon market died - and not without a few chuckles in some quarters. But the concept of Asiaclear, designed to settle trades in the hours when Euroclear and Cedel were asleep, did not.
Asiaclear was to be a commercial mirror of Euroclear - which had been set up by JP Morgan as a profit-making venture in 1968, and has been lucrative ever since. IBJ and HongkongBank examined Asiaclear's commercial viability. Neither house thought it had any.
"Euroclear had obviously been very successful and the idea of having a similar body in the Asia region was a natural follow-on," says HongkongBank's Guy Priestley, the senior planning manager who helped conduct an internal study three years ago. "But our main concern was: is there enough business to justify it? We felt not."
The ADB recently completed another review of Asiaclear. "We engaged some consultants to look at the issue," says Coe. "In the immediate short term there doesn't appear to be a financial gain. There may be some political impetus to move this forward, but there is not an immediate financial return."