CDSC yet to come into full operation KATHMANDU, JUNE 19: Despite the numerous inaugurations, the full automated operation of CDS and Clearing (CDSC) still seems like a Herculean task with less than a month remaining for the given deadline. The deadline for issuing companies to get their shares dematerialised by Nepal’s only central depository will be over by the end of the current fiscal year, according to CDS Regulations. However, only 11 listed companies have so far registered their listed stocks and bonds for dematerialised trading at CDSC. Moreover, clearing members who are indispensable for automated clearing and settlement have yet to get membership. Likewise, the number of demat accounts at depository participants (DP) that hold dematerialised shares is 327. Meanwhile, CDSC has undergone three formal inaugurations —the latest was held on April 15 by finance minister Shankar Koirala. The first was held on March 31, 2011, after the regulator had granted the Letter of Intent. The second inauguration was held on July 16, 2012, when it started the job of central depository by opening dematerialised accounts. “Companies have informally told us they will register their shares from the beginning of the coming fiscal year in order to avoid paying membership renewal fee,” informed chief executive of CDSC Subodh Sharma Sigdel. Based on their paid up capital, the annual fees for companies range from Rs 50,000 to Rs 500,000. Though CDS and Clearing is fully equipped to undertake automated clearing and settlement of shares traded, there are no clearing members who are required to electronically transfer dematerialised shares belonging to investors stored in demat accounts at depository participants. “Brokers have expressed their dissatisfaction with some clauses in Clearing and Settlement Bylaws,” said Sharma, informing that only two brokerage firms have submitted applications for clearing membership. CDSC had undertaken the clearing and settlement of a few dematerialised shares successfully in the beginning of April as a trial. “We are ready for full operation but due to the absence of clearing members, we are still unable to conduct electronic transfer of already dematerialised shares,” said Sigdel. Meanwhile, brokers want CDSC to amend its bylaws and remove clauses that they are not ready to abide by. “We have reservations regarding the necessity to keep Rs one million cash idle with CDSC in addition to the bank guarantee at Nepse,” said managing director of Kohinoor Investment and Securities — broker number 35 — Bharat Ranabhat. Clearing members are supposed to keep Rs one million at CDSC as a deposit in case of default or delay in settlement. “Likewise, it is also not right for CDSC to suspend a broker for one week for not being able to settle the transaction on time,” pointed out Ranabhat. “However, we have been told that CDSC is ready to look into the brokers’ demand, so hopefully we will join CDSC from the beginning of the new fiscal year,” he added. Back then clearing was done through brokers for it being a trial, but for the actual clearance of traded shares, a clearing member is indispensable. Moreover, the regulator, Securities Board of Nepal (Sebon)’s indifference towards enforcing issuing companies to get their shares registered and mediating talks between brokers and CDSC is also not helping bring CDSC into operation. “Since CDSC has not even started any operation, it is difficult for Sebon to direct companies to get their shares registered. Even if it had been operating in the basic phase it would have been easy for us to intervene,” said director of Sebon Niraj Giri. “However, Sebon will not sit idle and will hold talks with companies and even brokers so that investors can get advantage of automated trading and settlement,” he added. CDSC has fixed a flat rate of Rs 25 for dematerialised share transfer irrespective of the quantity transferred. Source: THT
Posted on: Wed, 19 Jun 2013 05:24:29 +0000
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