CDSC starts trial of automated settlement

KATHMANDU, MAR 25:

Investors will not have to hold on to share certificates for a long period as dematerialised share transfer is going to finally begin for real.

The much awaited central depository system of Nepal — CDS and Clearing Ltd (CDSC) — started testing the automated stock settlement and clearing system today.

“We are now fully ready to start automated clearing and settlement by mid-April,” informed chief executive officer of CDSC Subodh Sharma Sigdel, adding, “As a trial phase, we began the settlement and clearing of dematerialised shares of a few companies that have registered their shares with us.”

CDSC, that was inaugurated almost two years back, was not able to start automated clearing and settlement of traded shares despite setting deadlines that were continuously postponed. The latest snag in the series was the problem in the software system for calculating taxes and fees.

“Our software vendor has already tweaked the system to accommodate the current tax and fee structure, so there is not much holding us back,” he said, adding that Securities Board of Nepal — capital market regulator — will also approve the amendment in CDSC bylaws soon. CDSC has sought amendment in the bylaws to change its fee structure among others.

However, the biggest roadblock in CDSC operation — absence of listed companies that have dematerialised shares — is yet to be dealt with. Among the 225 listed companies at the stock exchange, only six have registered at CDSC for dematerialising shares. The deadline for companies to dematerialise shares was over in mid-January, but the inability of CDSC to start operations has voided the rule.

There are 249 demat accounts and CDSC has given licence to seven depository participants so far that will hold the dematerialised shares of shareholders.

Since mid-January, CDSC has started manual trading settlement and clearing of the transactions held at the stock exchange.

“Investors themselves will open demat accounts once we start full-fledged operation and regulation requires companies to register the shares with us once we become operational,” pointed out Sharma.

Source: THT