Six major ASEAN stock exchanges have committed to several initiatives to advance ASEAN as an attractive region.

Bursa Malaysia said in a statement on Tuesday that in respect of promoting regional market connectivity, the ASEAN exchanges agreed to jointly pursue the collaboration to offer depository receipts (DRs) in their respective exchanges, expanding access for domestic investors to investment opportunities in neighboring countries.

This follows last year’s DR linkage between SGX Group and SET which has yielded positive results, setting the stage to progress this to an ASEAN-level initiative.

Bursa Malaysia hosted the 37th ASEAN Exchanges CEOs Meeting on July 12, 2024, bringing together CEOs from the six major exchanges in ASEAN to discuss initiatives aimed at making the region more competitive, particularly by focusing on the sustainability ecosystem and regional market connectivity.

The meeting included CEOs/Presidents from Bursa Malaysia, Indonesia Stock Exchange (IDX), The Philippine Stock Exchange (PSE), Singapore Exchange (SGX Group), The Stock Exchange of Thailand (SET), as well as the Deputy CEO of Vietnam Exchange.

On the sustainability front, Bursa Malaysia said the past year saw growing momentum, with increased information sharing among ASEAN exchanges and observers, and the adoption of Common Environmental, social, and governance (ESG) metrics.

Peer exchanges have given their respective inputs to an ESG landscape survey to prioritize future ESG initiatives to be undertaken by the exchanges.

The ASEAN Exchanges’ CEOs/Presidents have also agreed to pursue four proof-of-concepts (POCs) over the next three years.

These include establishing an ASEAN data infrastructure to harmonize data structures and standards to form an aggregated ASEAN view, with the potential to create a unified commercial policy and operating model.

The exchanges also plan to pursue capacity building for listed issuers by creating standardized ASEAN ESG curriculum based on relevant global and local requirements to support listed issuers towards efficient, automated and scalable assurance processes.

Other measures include transition financing for corporates’ suppliers. This will incentivize quality reporting across supply chains working with banks to offer financing programs with preferential rates tied to disclosures and commitment to decarbonize.

The exchanges also look into ASEAN ESG Awards to reward listed issuers with exemplary ESG performance opportunities to elevate business profile internationally.

The ASEAN-Interconnected Sustainability Ecosystem (ASEAN-ISE) initiative, which started with a Memorandum of Understanding (MoU) between Bursa Malaysia, IDX, and SET, has since expanded to include SGX Group (February 2024) and most recently PSE (July 2024).

This significant development underscores the ASEAN bloc’s commitment in adopting and implementing Common ESG Metrics within their respective ESG data infrastructures, hence significantly improving transparency, comparability, and exemplary ESG practices across the region.

“The inclusion of PSE in ASEAN-ISE signifies ASEAN exchange members’ steadfast commitment to sustainable development as a unified market,

“The agreed-upon proof of concepts focuses our collective energy and resources on exploring and deploying workable models in targeted strategic areas,” said Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia.

According to him, these areas aim to elevate competitiveness by developing common data infrastructure, enhancing capacity building capabilities through economies of scale, and building an inter-connected marketplace to facilitate transition financing and capital deployment into businesses with superior ESG practices.

“We envisage a three-year glidepath and are open to exploring commercially viable business models or fit-for-purpose partnerships to accelerate this journey,” he added.

Ramon S. Monzon, President and CEO of PSE said that sustainability is a collective endeavor and they believe ASEAN-ISE provides them an opportunity to contribute to the development and implementation of ESG initiatives in the region.

“We are excited to collaborate with our peer exchanges in creating programs that will elevate the level of sustainability in ASEAN markets,” he added.

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