PRESENTORS

Muhammad Saad Adil Naeem

Central Depository Company of Pakistan

Contents
Introduction of CDC Incorporation Vision Organization Chart Operations Core Business
1. Central Depository System 2. Investor Account Services 3. Trustee & Custodial Services 4. Share Registrar Services

Introduction of CDC
CDC Pakistan is committed to provide secured & dependable services to the capital & financial markets in an efficient & cost effective manner comparable to best international practices. CDC is regulated by the Securities and Exchange Commission of Pakistan (SECP). CDC has branches in Karachi, Lahore, Islamabad and Hyderabad.

Introduction of CDC (Cont..)

CDC provides depository services to a wide range of Capital Market participants which includes:
Brokers Asset Management Companies Banks (including Custodian Banks) General retail investors.

It also serves to link up the Issuers and Registrars of securities and the market for the purpose of executing corporate actions like disbursement of corporate benefits and carrying out mergers and splits.

Incorporation
The system changes the Incorporated as a public limited (Unlisted) company in 1993. Central Depository Company of Pakistan Limited (CDC) is the only depository in Pakistan. The Company started operations in September 1997. Central Depository Company of Pakistan Limited (CDC) is the only depository in Pakistan.

Incorporation (Cont..)CENTRAL
CDC is the sole entity handling the electronic (paperless) SYSTEM settlement of transactions carried out at all three stock exchanges of the country CDC was primarily established to operate the CDS for equity, debt and other financial instruments that are traded in the Pakistani Capital Market.
DEPOSIT

Incorporation (Cont..)
Through efficient functioning of CDC, approximately 99% of the market settlement is in book entry form ownership of securities without any physical movement or endorsement of certificates and execution of transfer instruments.

Vision
To be a leading national institution providing quality services to capital & financial markets stimulating economic growth.

Organization Chart

Operations
CDC has diversified its operations in the following services:
Investor Account Services (IAS) were introduced in 1999 which allows retail investors to open and maintain securities accounts directly with CDC. Trustee and Custodial Services (T&C) were introduced in 2002 and enlists Open-end and Closed end Mutual Funds and Voluntary Pension Schemes.

Operations
Share Registrar Services (SRS) launched in 2008 which provides issuing companies state-of-the-art facilities of registrar and transfer agent services, including registration and verification of shares and records and customer dealing on behalf of issuer companies.

Core business
There are four core business of CDC which are as following:
1. 2. 3. 4. Central Depository System Investor Account Services Trustee & Custodial Services Share Registrar Services

Central Deposit System

CDS is an electronic book-entry system used to record and maintain securities and to register the transfer of securities, installed by an IBM-led consortium. The main function of CDC is to operate and maintain the Central Depository System (CDS), drawing guidance from a well-defined legal framework laid down by Securities & Exchange Commission of Pakistan (SECP).

Elements of Central Depository System

The Elements of CDS are: Participants / Account Holders Issuers Eligible Pledgees

Account Holder
Account Holders in CDS are divided in two categories:
Participants: Account Holders: are allowed to keep their beneficially owned securities in CDS and provide custody services to their clients as well. are only allowed to keep their beneficially owned securities in CDS.

Issuer
The companies or Issuers of capital whose securities (both equity & debt) are converted from physical to electronic securities play a significant role in CDS. The physical securities are converted into electronic book entry securities only after proper verification and approval by these Issuers in CDS. This process eliminates the problem of fake certificates as securities are thoroughly checked by the Issuers before approval for CDS.

Issuer (Cont..)
Security Induction process in CDS is divided into three major parts: 1. 2. 3. Declaration of Securities as CDS Eligible Securities Set up of Securities in CDS Deposit or Credit of Securities into CDS

Eligible Pledgees
In order to lend against electronic book entry securities, the pledgors can pledge the desired securities only in favor of Eligible Pledgee in CDS. Once pledged, the securities are no longer available for transfer/delivery to the pledgor until such time as Eligible Pledgee releases them from pledge. In short, the control over the pledged securities moves to Eligible Pledgee until the securities are released.

Benefits of Electronic settlement through CDS

Following are some of the benefits of electronic settlement of securities through CDS:

1. Reduced workload and manpower requirements due to paperless settlement. 2. Instant transfer of ownership. 3. No stamp duty on transfers in CDS.

Benefits of Electronic settlement through CDS

4. No risk of damaged, lost, forged or duplicate certificates. 5. No impact in case of sudden increase of settlement volumes. 6. Instant credit of corporate entitlements (bonus, rights and new issues). 7. Paperless environment (no traditional vaults).

Benefits of Electronic settlement through CDS

8. 9. 10. 11. Secure custody of securities. Substantial reduction of paperwork during book closure. Convenient pledging of securities. Substantial reduction in time & capital investments.

Investor Account Services

Investor Account Services (IAS) offered by Central Depository Company (CDC) allows retail investors to directly open and maintain accounts with CDC in Central Depository System for electronic settlement of securities. Earlier, to settle the securities through Central Depository System, investors had to open client accounts (sub accounts) with the CDS Participants (brokers & financial institutions).

Investor Account Services (Cont..)

With Investor Account Services, investors can now have direct access to their account.
Investors now have direct access to their securities, which are maintained by CDC and accounts operated on the instructions of investors. CDC is regulated by the Securities & Exchange Commission of Pakistan. The relevant legislations are Companies Ordinance 1984, Central Depositories Act 1997 and Central Depository Company of Pakistan Limited Regulations.

Trustee & Custodial Services

In 2002, the mutual fund industry started flourishing in the Pakistani Capital Market and provided a new concept and investment arena to retail and individual investors who possess inadequate knowledge of the capital market but are interested in utilizing its benefits.

Transfer Share Registrar Services

Agent
CDC offers Share Registrar Services (SRS) to facilitate Issuers and their shareholders. This initiative was taken in early 2008 to cater to the growing need of more comprehensive and efficient SRS in the Pakistani Capital Market.

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