CDSC starts operations, gets mixed reaction
KATHMANDU, OCT 31:
The job of clearing and settling traded shares has officially shifted base to the country’s only central depository — CDS and Clearing (CDSC) from Nepal Stock Exchange (Nepse) — amid doubts regarding the effectiveness of the new mode of operation.
“We have started the manual settlement of a few transactions done on October 17 from today, as festival holidays in between delayed the process,” said chief executive of CDSC Subodh Sharma Sigdel.
CDSC had planned to start manual clearing and settlement of share transactions post-October 17, to provide swifter settlement and clearing services to investors.
Nepse that used to undertake the job was criticised for delaying the process beyond the three days from trading as mandated in its bylaws. “We are working towards completing the settlement within T+3 days, but the absence of employees due to festivals, both at brokers and here, has delayed the process a bit,” said Sigdel.
However, CDSC has asked both selling brokers and buying brokers to be present simultaneously for the settlement, which, according to brokers, is not practical. The documentation will not move forward, even if any one of the buying or selling brokers has not submitted the needful documents. “If one of the brokers delays in submitting the papers for any reason, the settlement of all the transactions done by other brokers with that particular broker will also get delayed,” said a stock broker.
“As some brokers do not have enough staff at present, other brokers also have to wait for them, creating difficulties,” informed another broker, who did not want to be named.
Nepse had tried to introduce a similar system earlier, but could not implement it due to opposition from brokers. CDSC has also agreed to adjust the system, if it creates any problem in the future.
Likewise, to start automated clearing and settlement service, CDSC is still waiting for the Clearing and Settlement Regulation. The current clearing and settlement rules in the bylaws of Nepse cover only manual settlements and not automated ones. Likewise, it needs to revise CDSC software.
Source: THT
