KBZ, the country’s largest private bank, has been chosen to run settlement and clearing operations for the forthcoming Yangon Stock Exchange, according to KBZ senior managing director U Than Cho.
The bank has the widest network among private banks and has the digital integration necessary for a settlement bank, he said.
“We can serve buyers and sellers as soon as possible on the stock exchange,” he said yesterday.
The Yangon Stock Exchange is slated to launch later this year, marking the country’s first modern securities market.
KBZ had competed with five other private banks to be the settlement bank, which is responsible for delivering the stocks and money payments after 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.
KBZ was ultimately selected by the Securities and Exchange Commission of Myanmar, and is currently the only designated settlement bank for the market.
The SECM 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.
U Than Co said human resources are one of the first priorities.
“We will gather together employees who can do the job, and we will also nominate some of our existing employees,” he said. “At the same time, we are open to foreign employees who have experience. We have to find managers and a managing director on time.”
KBZ will open a new branch near the stock exchange building to fill its role as settlement bank, with preparations having already begun, according to U Than Cho.
“This is a new field for us. We face challenges that require experienced employees and also leaders. We will go to study in Thailand, Singapore and Japan before we open,” he said. “Then we will ask for help from our foreign alliance banks like Sumitomo Mitsubishi for solving the human resources problem.”
KBZ has already formed a separate IT department, he added. “We are already the leading retail and wholesale bank in the country. Now we have the permit to be the settlement bank [for the Yangon Stock Exchange]. We are one footstep ahead of the others.”
Source: Myanmar Times