Asian investors can now settle more than 250,000 different European debt papers in Hong Kong through a direct link between clearing houses in the SAR and Europe. The Hong Kong Monetary Authority's bond settlement arm, Central Moneymarkets Unit (CMU), opened the link with leading cross-border clearing house Clearstream Banking Luxembourg yesterday. The link means Asian investors who are CMU members can settle eligible European debt papers in Hong Kong. The alliance, part of the government's efforts to promote Hong Kong as an Asian debt market hub, is aimed at increasing efficiency and encouraging regional investors to trade European bonds. It follows an indirect one-way link established in 1994 that enabled Clearstream customers to clear and settle debt securities lodged with the CMU, a custodian of debt securities worth HK$19 billion. Philippe Metoudi, executive director of Clearstream Banking Asia-Pacific, Middle East and Africa, said the link would help increase trading liquidity. 'It will encourage more Asian investors to trade European debt papers in Hong Kong. This will increase market liquidity and encourage cross-border trading,' he said. Before yesterday's link, Asian investors buying or selling European bonds had to wait for the European markets to open to settle deals. They had to bear the risk of a time difference of between six and seven hours across the market regions. 'Now they can settle their European bond trading in Hong Kong. The time gap problem will be removed. This eliminates the risk faced by investors,' Mr Metoudi said. HKMA chief executive Joseph Yam Chi-kwong said the link would enhance the clearing and settlement capabilities of the CMU in international securities. 'It provides a convenient and cost-effective settlement avenue for cross-border transactions. 'Such a robust securities settlement platform in Hong Kong will lay a good foundation for development of debt securities markets in the region,' he said. Andre Roelants, chief executive of Clearstream International, said the link was a demonstration of the clearing house's commitment to helping Hong Kong achieve its goal of becoming a regional securities hub. Mr Metoudi said Clearstream International now covered 39 markets. The company had been operating in Asia for 12 years and the CMU link would enhance its position, he said.