The financial collaboration marks a significant move to mend diplomatic relations between the two countries. Those relations were strained by Temasek Holdings' takeover of Shin Corp last year.

In spite of the diplomatic bickering over the visit to Singapore by deposed prime minister Thaksin Shinawatra, the two finance ministers decided to advance their economic cooperation at the Asean meeting in the northern province of Chiang Mai.

Thai officials said the project was very concrete and could be implemented soon.

Thailand and Singapore already exchange information on bond trading and will now bridge their information-trading systems and then create a clearing-and-settlement mechanism to facilitate cross-border trading, said Fiscal Policy Office director-general Pannee Sathavarodom.

Singaporean investors currently subscribe to Thai bonds through dealers, while Thai investors also buy Singaporean bonds, she said.

The bond market here has grown rapidly over the past few years, reaching about 48 per cent of gross domestic product (GDP), while bond trading in Singapore is equal to 60 per cent of its GDP.

Other Asean countries were not yet ready to sign such an agreement but indicated they would work towards setting up an Asean bond-information network.

Less-developed countries like Laos may have to wait until 2015, when Asean's ambition to forge an Asean Economic Community is fully realised.

Wichit Chaitrong,The Nation