KATHMANDU, May 13: The Central Depository System (CDS) and Clearing Limited, a state-owned firm formed to automate share ownership transfer process and settle securities sold on the stock market, is coming into operation soon as it has appointed its first depository participant (DP).
Civil Capital Market became the first company to acquire the license of DP, an intermediary which collects physical certificates of shares and bonds from investors and keeps their record in electronic form - a process known as dematerializing.
A decision in this regard was taken by a board meeting of CDS and Clearing Limited held on Sunday, Subodh Sharma Sigdel, CEO of CDS and Clearing Limited, told Republica. “The company would be issued the license on Monday,” he said.
After Civil Capital Market gets the license, it will have to link its network with that of CDS and Clearing Limited.
“It will then be able to open accounts for investors who wish to keep electronic record of their shares, bonds and other securities,” Sigdel said.
As per the regulation, an investor can open a single or multiple accounts with a DP in which records of all the securities, such as shares and bonds, will be kept.
Currently, investors of securities are issued paper certificates.
“But once electronic system goes live, ownership transfer of all the securities will be conducted online,” Sigdel said. “Besides, the DP will also credit or debit securities from investors´ accounts immediately upon the investors´ instruction which will ease the process of share transaction.”
This means, investors willing to, say, sell their shares can inform the DP and instruct it to move the shares to the account of respective stock broker, which will make share transfer process instant.
According to the CDS regulation, the clients have to pay Rs 50 as registration fee to open an account and pay an annual fee of Rs 100 to the DP. The DP can also charge a transaction fee equivalent to 0.25 percent of every transaction, of which 20 percent has to be provided to CDS and Clearing Limited.