Automated share clearing by early 2013
KATHMANDU, DEC 07:
CDS and Clearing Ltd (CDSC) is gearing up to start the electronic clearance of traded shares by mid-January.
CDSC, which is at present undertaking manual clearing and settlement, is waiting for approval of the amendments of its bylaws from the Securities Board of Nepal (Sebon) –– capital market regulator.
“Securities Board of Nepal has told us that it is in the final stages of approving the CDSC bylaws and as soon as they approve it we will adjust the changes made in the bylaws and start electronic settlement,” said CEO of CDSC Subodh Sharma Sigdel.
“We are planning to start electronic clearing and settlement operations by mid-January,” he added.
CDSC Bylaws 2068 is up for revision regarding the fees it is charging among others. Stakeholders had an objection regarding fees that CDSC would be charging for transferring the shares saying it was expensive. The current provision requires investors to pay either 0.25 per cent of the transaction amount or Rs 20, whichever is higher.
“Sebon is still studying the amendments and the board will approve the changes soon,” said director of Sebon Niraj Giri. “We will approve the bylaws on time and they will be able to start operations from mid-January,” he added.
Nepal’s only central depository system started undertaking manual clearing and settlement of share transactions from October 17.
Earlier, Nepse used to undertake the job but it was criticised for delaying the process beyond the three days from trading as mandated in its bylaws.
“Currently, Nepse has only outsourced the job to us, so the bylaws do not have to be amended,” pointed out Sigdel.
CDSC also needs to revise a few parameters on the CDSC software to adapt new settlement rules as well.
Though CDSC has started manual clearing, its new mode of operation has created hassles for brokers. The new mode requires both the selling and buying brokers to present documents simultaneously so that settlements can be undertaken within four days of trading, as per the rule.
However, since brokers have a difficult time in taking the documents together, settlements have kept piling up. On Sunday, due to the delay in the settlement of traded shares, all brokers at the stock exchange were suspended during the first hour of trading.
“Brokers, CDSC, Sebon and Nepse have held a round of talks regarding the matter, and once all the board members of Nepse and CDSC are together we will come to some conclusion regarding the matter,” said Sigdel. CDSC is a subsidiary of Nepse. Central depository will keep records electronically in a dematerialised form allowing swift settlement and clearing of share transactions. CDSC started the process of dematerialising share certificates from the beginning of the current fiscal year.
There are four listed companies that have registered for dematerialisation of their shares and there are 230 demat accounts. CDSC has given licence to four depository participants that will hold the shareholders’ dematerialised shares.
Source: THT
