1/22/2014

CDC Central Depository Company of Pakistan

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FAQ's->CDS
1 - What is Central Depository System ? C DS is an Electronic Book Entry System: To record & maintain securities To register transfer of securities. The system changes the ownership of securities without any physical movement /endorsement of certificates & execution of transfer instruments. 2 - What are CDS Elem ents? There are three Elements of C DS namely: Account Holders Issuers/R/TA Eligible Pledgees. These Elements have a defined role in the C entral Depository System as the system is driven by them without direct involvement of C DC on day-to-day basis. 3 - What is m eant by Account Holder? Account Holders are divided into two categories; Account Holders and Participants. Both, Account Holders and Participants have direct access to C DS. Account Holders are only allowed to keep their beneficially owned securities whereas Participants, in addition to maintaining their beneficially owned securities, are entitled to open Sub-Accounts in C DS in order to further provide custody services to their clients. 4 - Who can becom e Account Holder/Participant in CDS? Members of Stock Exchanges (for C orporate Member, standard custody clause in Memorandum of Association is mandatory), C ommercial Banks, Modarabas and Developmental Financial Institutions can become Participant. Whereas, all entities (Private and Public) can be admitted as Account Holder. 5 - Who is an Issuer? The companies whose securities (both equity and debt) are inducted in C DS (directly in book entry form or by the way of physical deposit of securities) are called Issuers. Issuer may appoint the R/TA (Registrar/Transfer Agent) to perform its obligations or take action on its behalf. The Issuers/R/TA of capital also have direct access to the C DS. Once a security is declared eligible and becomes 'live' for the purposes of C DS, the necessary software and connection are provided to the Issuer of that particular security. The physical securities are converted into electronic book-entry securities only after proper verification by these Issuers or appointed R/TA. This process eliminates the problems of forged, duplicate, damaged or lost certificates as securities are thoroughly checked by the Issuers/R/TA before approval for C DS. 6 - Who is an R/TA? An R/TA (Registrar/Transfer Agent) may be appointed by an Issuer of Security to perform its obligations or take action on its behalf. The R/TA should be a company formed and registered under the C ompanies Ordinance, 1984 (Refer rule 4 of the Balloters, Transfer Agents and Underwriters Rules, 2001). Such appointments are required to be notified to the C DC (Refer C DC Regulations no 5.6.1). 7- When is it m andatory to acquire the services of independent R/TA? Issuers who are also maintaining Account Holder/Participant account in C DS are required to outsource their R/TA function to an independent R/TA. Further, as per section 204A of the C ompanies Ordinance, 1984, all listed companies [whether they maintain an Account Holder/Participant Account or not] are required to appoint an independent R/TA. (Refer C DC Regulation # 8.11) 8 - Who is an Eligible Pledgee? Any C ompany, C orporation or Institution such as Banks / Financial Institutions / Development Financial Institutions that are authorized to provide financing against securities can join C DC in the capacity of Eligible Pledgees. Further, Stock Exchanges / C learing C ompanies can also join C DC in the capacity of Eligible Pledgees for risk management purpose. 9 - Who can request CDC to open their Margin Trading (MT) Account in CDS? C DS Participants / Account Holders who have been admitted as Trading Financiers by NC C PL can request C DC to open their MT Account. 10 - Who can request CDC to open Margin Financing (MF) Account in CDS? C DS Participants / Account Holders who have been admitted as Eligible Financiers by NC C PL can request C DC to open their MF Account.

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