AUSTRALIA’S securities exchange will offer a service settling trade in yuan as part of a venture with Bank of China Ltd., a further push by financial companies to tap rising capital flows between Australia and its biggest trading partner.

    The settlement service will allow Australian firms to take or make payments with Chinese investment and trading partners through ASX Ltd.’s Austraclear market infrastructure.

    Details of the payment platform and the agreement with Bank of China are due to be disclosed today, an ASX spokesman said yesterday.

    “This is a significant development in Australia’s relationship with China by facilitating the yuan’s internationalization and strengthens the connection between our financial markets,” the exchange operator said in an invitation to a signing ceremony with Bank of China in Sydney.

    Settling directly in yuan instead of through the U.S. dollar simplifies trade and cuts the cost of doing business in China for Australian companies. Since mid-2009, China has been slowly loosening its grip on the yuan and cross-border money flows in an effort to spread the use of the currency in international trade and investment.

    Two Australian lenders, Westpac Banking Corp. and Australia & New Zealand Banking Group Ltd., last year received licenses from the People’s Bank of China to act as market makers for direct trading of the yuan and Australian dollar.

    Earlier this month, Westpac said it planned to launch a new derivatives business from its branches in Shanghai and Beijing after being granted a general derivatives license by the China Banking Regulatory Commission.

    (SD-Agencies)