CDSC to start clearing, settlement in a week
KATHMANDU, OCT 11:
Manual clearing and settlement of share transactions is most likely to be undertaken by CDS and Clearing (CDSC) by next week, although automated settlement of dematerialised scrips will not be taking place anytime soon.
CDSC — Nepal’s first central depository system — is all geared to take up the job of clearing and settling physical scrips from Nepal Stock Exchange (Nepse) by October 17.
“We are preparing to start the settlement and clearing of share transactions post-October 17, so if everything goes as planned, investors will have to come to CDSC instead of Nepse to transfer ownership and settle payments,” said chief executive of CDSC Subodh Sharma Sigdel.
Earlier, CDSC had planned to start the settlement procedure by September 17. “This time we have already held discourse with brokers and the stock exchange regarding the matter and have got positive feedback,” said Sigdel.
At present, Nepse undertakes transfer of share ownership and settlement of payments between investors. It is supposed to carry out the settlement within four days of share transaction through brokers, which means that after three days following the trading, Nepse must conclude the whole payment process. However, Nepse is notorious for delaying settlements, at times taking even months, and transfer of share certificates takes four weeks at the earliest.
A few months back, Securities Board of Nepal (Sebon) — capital market regulator — had sternly directed the stock exchange to settle payments within ‘T+3’ as promised in
its bylaws.
“We will be able to finish settlement within T+3 at present, and after starting demat settlement, the process will take even less time,” added Sigdel.
CDSC is unable to start automated clearing and settlement service in absence of Clearing and Settlement Regulation being prepared by the regulator.
The current clearing and settlement rules in bylaws of Nepse can only cover manual settlements and not automated ones. Moreover, after the introduction of the regulation, CDSC will have to tweak the software to adapt to the regulation. Central depository will keep share record electronically in dematerialised form and allow rapid clearing and settlement, boosting capital market.
CDSC started the process of dematerialising share certificates from the beginning of the current fiscal year. It has four Depository Participants — Nabil Investment Banking, Everest Finance Ltd, Ace Capital and Civil Capital — that will hold dematerialised accounts.
Agricultural Development Bank and Ace Development Bank have already got their shares registered for dematerialisation. “There are 12 more Depository Participants in the pipeline and a few more companies — like Laxmi Bank, Bank of Kathmandu, Siddhartha Bank and Siddhartha Insurance — that have applied for registration,” he informed.
Source: THT
