CDSC needs to be an autonomous body
KATHMANDU:
Lack of coordination between Nepal Stock Exchange (Nepse), Securities Board of Nepal (Sebon) and CDS and Clearing Ltd (CDSC) had caused the delay in the full operation of the latter.
“The difficulty in CDSC starting its full fledged operation was brought about by the lack of coordination between these two capital market related agencies and the regulator,” said chairman of CDSC and Nepse Jibanath Dhital, during a press meet today. Dhital, whose term as chairman of both Nepse and CDSC ended today, expressed that coordination between the regulator, stock exchange and central depository has improved as compared to what it was two years back.
He also pointed out the need to make CDSC autonomous. At present, CDSC is a subsidiary of Nepse that owns hundred per cent stake at CDSC with an investment of Rs 300 million. “By keeping CDSC as a subsidiary of the stock exchange we are also limiting its scope in the capital market,” said Dhital.
“CDSC can also work as a national academic depository that can store certificates and transcripts of universities, or even digital records of different government agencies that are not related to the capital market,” he added.
CDSC’s CEO Subodh Sharma Sigdel said that CDSC might start dematerialising government securities such as bonds and treasury bills in the near future then we might also be under the regulatory ambit of Nepal Rastra Bank. So being under the complete control of Nepse might not work in favour of the company, he added.
He also announced that CDSC is now ready to go live and start its full operation for automated clearing and settlement of dematerialised shares traded at the stock exchange. As CDSC has granted membership to brokers as clearing members, every required component for CDSC’s full operation is now in place.
Earlier, brokers were not keen to take up the clearing membership until CDSC and the regulator — Sebon — decided to accept a bank guarantee instead of cash on behalf of the brokerage firms to cover cases of default or delay in settlements. The clearing and settlement bylaws of CDSC had asked brokers who are meant to be clearing members of the central depository system to deposit Rs one million in cash as collateral with CDSC.
Clearing members electronically transfer dematerialised shares belonging to the investors stored in demat account at Depository Participants .
Though there are 28 clearing members and 10 DPs, the number of firms with shares registered for dematerialisation is 15 among the 230 listed firms. There is still a doubt regarding CDSC’s smooth operation due to lack of registered firms and unwillingness of investors to dematerialise shares they are holding.
Source: The Himalayan Times
