ASIAN debt market growth is one of those revolutions that, unless you open your doors and make it welcome, will bypass you on its way to transforming the face of regional capital markets. The Hong Kong stock exchange's new mission statement that it will try to make this growing sector as comfortable as possible in the territory's capital markets is welcome and should be acted upon by debt market practitioners. Its statement last night concerning the overhaul of listing requirements covering debt securities is the green light from the territory's front-line regulator, a sign that it wants to talk business about listing debt securities. The people working at the exchange are not an island where practitioners should fear to tread. Merchant and investment banks alike should ensure as far as possible that as the rules are formulated and set from wax to marble, they end up in a shape that will maximise the territory's chance to lead in Asian debt securities. There will be little point in complaining this time next year about apparently ill-advised regulation of debt securities because of a lack of practitioner help. Merchant bankers in Hong Kong, however, see a yawning opportunity opening up for the territory to become the Asian-time-zone trading, clearing and settlement centre for regional debt securities. A caveat however needs inserting. It is hoped the exchange will not waste its time chasing up a blind alley trying to attract United States dollar-denominated debt which has recently come in the form of corporate Euro bonds and Euro convertibles. From the point of view of the practitioner this would be a total waste of time as the US dollar issuers are truly global. It does not matter where they are done, the Luxembourg listing and the swift transacting of this business through Euro-clear makes European-time-zone clearing and settlement almost impregnable to competition from Asia. This might not be a line taken by everyone, so let's hope it is fully debated. What clearly is needed, and has now been recognised by some of the aggressive investment banks, are comprehensive Asian currency-denominated issue clearing and settlement arrangements. It is as yet unclear which direction Asian currency notes will take. But it looks as if quite a lot of this paper is going to be generated over the coming months and years. From Lehman Brothers we have seen the establishment of an Asian Currency Note (ACN) programme where regional corporate or non-government issuers are offered a facility to issue notes in their home currency which can be cleared and settled in the region. They have centred this in Hong Kong, via client trustee arrangements in the territory linked to the regional Citibank network to consummate transactions by moving money into the right bank arrangements via local branches. Whether this will take off for Lehman remains to be seen. The problem here is competitor banks won't use the arrangements. There are obvious reasons for the development of Asian currency note issues. The growing intra-regional trade means corporations and some financial institutions require Asian currency exposure to effectively manage their commitments across country borders. Growing overseas institutional investor interest in obtaining an exposure to Asia's hot economic stories, without going into equity just yet, is also fuelling demand. In Hong Kong equities, just as in many ASEAN equity markets, there is significant embedded profit yet to be taken by institutional investors. The crystalisation of these gains in locally denominated debt securities is bound to fuel their appetite for ACNs. In Hong Kong the Government has a vested interest in establishing a healthy local ACN market to aid the whole process of funding and supporting the airport project. As for the US investment banks, they are here because they have identified some opportunities to make money locally. But over the long term their objective is to reap the lucrative rewards on the horizon in China. The reform of financial arrangements in China and its financial governmental institutions is due to ignite one of the biggest debt markets ever seen in Asia outside Japan. This is the investment bankers' quarry.