Asifma Agreement among Underwriters
The Asia Securities Industry and Financial Markets Association (ASIFMA) recently announced the signing of the ASIFMA Agreement Among Underwriters. The agreement aims to facilitate the issuance of international bonds and promote the standardization of underwriting practices across Asia.
Underwriting is a process whereby an underwriter, typically a bank or financial institution, assumes the risk of a security issuance and purchases the entire issue from the issuer. The underwriter then resells the securities to investors, acting as a market maker for the issuer.
The ASIFMA Agreement Among Underwriters outlines a framework of best practices for underwriting international bond offerings in Asia. It includes guidelines for the allocation of securities among investors, market stabilization measures, and transparency in pricing and fee structures.
The agreement is a significant step towards aligning underwriting practices across Asia, where the regulatory landscape and market conditions can differ greatly from country to country. By standardizing underwriting practices, the agreement will improve the efficiency and transparency of the issuance process and reduce the risks associated with cross-border bond offerings.
The ASIFMA Agreement Among Underwriters is also expected to enhance the credibility of the Asian bond market by promoting stronger investor protections and more rigorous due diligence processes. It will help attract more international investment to the region by giving investors greater confidence in the integrity and stability of the Asian bond market.
The signing of the ASIFMA Agreement Among Underwriters is especially timely as the COVID-19 pandemic has significantly impacted the global economy and necessitated increased government borrowing. Many Asian governments are expected to issue bonds in the coming months to fund economic stimulus packages and other recovery efforts.
In conclusion, the ASIFMA Agreement Among Underwriters is a significant milestone in the development of the Asian bond market. By promoting standardization and best practices in underwriting, the agreement will increase efficiency, transparency, and investor confidence in the region. As Asia continues to play an increasingly important role in the global economy, the agreement`s impact is expected to be felt far beyond the region.