New rules for registration and settlement of debt securities in Macau

Following the launch of the Macau SAR Central Securities Depository System operated 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 appoint to perform bond settlement services, including underwriting, trading, interest payment and redemption.

Although only recently launched, the Macao SAR bond market is changing rapidly. A new guideline on the registration and settlement of debt securities, including bonds and negotiable certificates of deposit, issued by the Macau Monetary Authority (AMCM) has recently come into effect. The directive strengthens existing rules and regulations while promoting the development of an efficient and reliable financial market in the Macau SAR.

Unsurprisingly, this new directive is in line with Macao SAR’s plans to promote economic diversification and sustainable development, as the policy speech for fiscal year 2022 released by the Macao SAR government highlighted the importance to pursue the integration of the region into the Greater Bay Area while building a modern and robust financial market.

Under this guideline, MCSD, a wholly owned company of AMCM, will provide all services related to the centralized registration, custody and settlement of all debt securities, including:

• Establishment and management of debt securities accounts and participant accounts;

• Custody and transfer of debt securities;

• Registration of holders of debt securities and their rights and interests;

• The clearing and delivery of debt securities and funds, and the corresponding management;

• The distribution of rights and interests as entrusted by the issuers; and

• The provision of information to inquiries about the registration and settlement of debt securities.

Issuers wishing to register issued debt securities and investors wishing to hold debt securities must open an account with MCSD, which will be maintained at all times in accordance with applicable laws and regulations and the operating rules, while registering the balance of debt securities held. by any account.

In view of the foregoing, when debt securities are transferred by convention, succession, gift, forced execution or administrative assignment, or when debt securities are pledged, blocked or frozen, resulting in limitations on the rights of the holders, MCSD will record or mark them accordingly.