Serbia joins Clearstream, opening up domestic securities market to foreign investors

Serbia joins Clearstream, opening up domestic securities market to foreign investors
By Eldar Dizdarevic in Sarajevo October 5, 2021

Clearstream, the international central securities depository (ICSD) of Deutsche Börse Group, included the Serbian capital market in its global network on October 4, which will significantly facilitate the access of foreign investors to the domestic securities market.

Clearstream is the first international central register of securities that will enable foreign investors to directly settle government bonds denominated in dinars, as announced by Clearstream and the Serbian Ministry of Finance. The presence of Clearstream will contribute to a further increase in the participation of foreign investors and raise liquidity in the Serbian capital market. 

Adding Serbia to the Clearstream network “aims to attract cross-border investments and thereby improve liquidity in the domestic capital market. Clearstream customers will benefit from an omnibus account structure, which increases operational efficiency, and its suite of ICSD services, including offshore (internal) settlement to other Clearstream Banking clients without the need to revisit the domestic market,” a press release from Clearstream said. 

The Ministry of Finance said it expects that this step will create strong links with global systems that perform clearing and settlement operations and will significantly facilitate the access of foreign investors to the Serbian capital market.

The bonds of the Republic of Serbia were previously included in the J.P. Morgan Emerging Markets Bond Index, which significantly contributed to strengthening the liquidity of the secondary government bond market, as well as the arrival of new international foreign investment funds. The inclusion of Serbian bonds in the index was a consequence of a strong and stable domestic macroeconomic environment, as well as long-term efforts to develop the domestic financial market, said the ministry.

Clearstream is one of the world's leading financial institutions for clearing and clearing domestic and international securities. It is part of the Deutsche Börse Group and provides post-trading infrastructure for the Eurobond market and 59 domestic government securities markets worldwide. 

Other emerging Europe markets that joined Clearstream saw a strong upturn in investment into their domestic debt. As reported by bne IntelliNews, yield-hungry foreign investors piled into Ukraine’s domestic debt from almost the first day the local exchange was hooked up to Clearstream in summer 2019. 

“We look forward to adding Serbia to our global network, offering our clients access to the domestic capital markets together with excellent local partners. This cross-border link creates various new investment and financing opportunities for the domestic market, underpinning our commitment to connect capital markets all over the world,” said Jan Willems, head of global markets at Clearstream. 

Raiffeisen Bank International will act as the exclusive local agent for Clearstream's domestic business.

Harald Kreuzmair, division head global investor services within Raiffeisen Bank International, noted that Serbia is already one of the bank's focus countries, where it intends to further grow its operations. “[W]e as well, believe in a bright future of the country and the market and together with Clearstream and its clients we will support this development,” he said.