Josef Landolt, chairman of the International Securities Services Association (ISSA), urged securities clearing organisations in Asia Pacific to follow developments in Europe carefully. "By watching European re-orientation from a safe distance, your region may be able to draw valuable conclusions for your own future," he said

Mr Landolt was speaking at the Asia-Pacific regional meeting of ISSA. Hong Kong Exchanges and Clearing Limited (HKEx) was the local host for the meeting. The meeting was attended by 77 senior management level delegates representing the securities markets of 15 countries.

ISSA regional meetings are held once every two years in each of the three time-zones - Asia, Europe and America. This years European regional meeting will be held in Paris in June and the American regional meeting will be held in New York in September.

Mr Landolt said Europe was in a phase of intense competition between two models of convergence. "The first model is one of vertical integration where exchanges, clearing companies and the depository within one country merge." This approach generally appeals to traditional exchanges which form financial services groups because they realise that trading alone does not generate sufficient revenue to compete with cheaper internet based trading systems.

The developing formation of a pan-European marketplace with a common currency has convinced many market participants that nationally organised financial markets are a thing of the past, Mr Landolt said.

"The European Securities Forum is promoting the model of horizontal integration. In this model, national exchanges are replaced by a more open architecture along three functional levels - trading, clearing and settlement, and custody. In this way, each market participant can gain access to a range of pan-European services through a single point of entry."

He said it was impossible to forecast which model would prevail. Formation of national centres was in progress but it was possible that a number of national centres could combine into regional centres, as greater legal and other harmonisation occurred in Europe. "One thing is certain: due to competitive pressures, Europe will have fewer operators of clearing and settlement systems in three to five years, but not necessarily fewer systems," Mr Landolt said.

In the opening remarks to the meeting, Kwong Ki-chi, the Chief Executive of HKEx, said the meeting was well-timed as today's global financial markets were undergoing fundamental changes.

"Probably at no other time have so many changes taken place in so short a time in the securities industry. Like it or not, we have to view these changes positively, welcome them and adapt to them," he said, adding that Hong Kong's response to the changing global market was a radical reform of its securities and futures market.

In a keynote speech, Walter Reisch, HKExs head of clearing and chief executive of Hong Kong Securities Clearing Company Limited, a wholly-owned subsidiary of HKEx, gave details of the structural changes that have taken place in Hong Kongs securities market.

He also outlined planned future changes including the upgrading of CCASS, the Central Clearing and Settlement System. This will include technical and functional architecture upgrades.

In another keynote speech, Peter Chia, executive vice president of Singapore Exchange Limited, gave details of the straight through processing system, planned for introduction in Singapore this year.

ISSA was founded in 1979 and is incorporated in Switzerland. It is a private association of banks, clearing organisations, central depositories, stock exchanges, brokers, asset managers and similar institutions. It provides a forum for the discussion of industry issues for all sectors along the securities services value chain.