CDC Pakistan profile for Depositarium Magazine


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CDC Pakistan profile for Depositarium Magazine

  1. 1. Central Depository Company of Pakistan Limited General information: Incorporated in 1993, Central Depository Company of Pakistan Limited (CDC) is a public limited (unlisted) company and the sole depository in Pakistan handling the electronic settlement of securities transactions carried out at all three stock exchanges of the country. CDC Pakistan started operations in September 1997, currently managing approximately 99% of the market settlements in book entry form and providing depository services to a large number of Capital Market participants which includes Brokers, Asset Management Companies, Banks (including Custodian Banks), Issuers/ R/TAs and general retail investors. The Company also links Issuers & Registrars of securities and Investors for the purpose of executing corporate actions like disbursement of corporate benefits (cash dividends, bonus shares etc) and processing mergers and splits. The aim of CDC is to continue functioning as a central securities depository on behalf of the financial services industry so as to contribute to the country's ability to support an effective capital market system. The Company’s shareholders include financial institutions primarily stock exchanges and banks. Regulated by the Securities and Exchange Commission of Pakistan (SECP), CDC Pakistan has offices in Karachi, Lahore and Islamabad. For the year 2012-13
  2. 2. Diversified Services Portfolio: CDC Pakistan was established to operate the Central Depository System (CDS) for equity, debt and other financial instruments that are traded in the Pakistani Capital Market. However, with the passage of time and development of Pakistan’s Capital Market, it now also provides other services that are beyond the traditional depository domain. The Company has diversified its services portfolio with the view of benefiting country’s capital market and for its sustainable growth: Central Depository System Central Depository System (CDS) is an electronic book entry system built on a well- defined legal framework laid down by the Securities & Exchange Commission of Pakistan (SECP). The system records and maintains securities and their transfer’s registration. The system changes the ownership of securities without any physical movement or endorsement of certificates and execution of transfer instruments. Investors can have their securities, subscribed in IPOs, directly credited to their accounts in electronic form. The system also facilitates the processes of Merger, Demerger and Consolidation / Sub- Division. It manages Ordinary & Preference shares, Term Finance Certificates (TFCs), Bonds, Sukuk, Modaraba and Open-End & Closed-End funds. Now in its 16th year of operation, the securities under the custody of CDS have crossed one hundred billion Pakistani Rupees with its market value touching approximately Pak Rupee 3 trillion. As of June 30, 2013
  3. 3. 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). With Investor Account Services, investors can now have direct access to their account. After the dematerialization of security certificates, investors no longer have physical possession of securities and are troubled by the lack of control over their securities. By opening Investor Accounts with CDC, investors are able to directly control their electronic securities. Although trading is still done through brokers, settlement is done through CDS on written instructions from investors. They can also always remain updated about their Account information using free-of-cost CDC Access services which comprise of Web, IVR, SMS, eStatements and eAlerts. Trustee and Custodial Services CDC Pakistan, realizing the importance and service demands of the mutual fund industry started Trustee & Custodial Services in 2002. The Company, through its proactive approach and high standards of service, has become the market leader with 85% share in the private sector providing services to various mutual funds and discretionary portfolios managed by Asset Management Companies and Pension Fund Managers. Since the start of this operation, the CDC Trustee and Custodial Services has become the preferred choice due to its excellent service and the level of business understanding possessed by its staff. The prime responsibility of CDC as the trustee and custodian is to take into its custody all the assets of the Collective Investment Scheme & funds and hold them in trust on behalf of the unit & certificate holders. Additionally, CDC carries out the instructions of the asset management company, investment advisor and pension fund managers in respect of the investment portfolio and the units & certificates held by the investors, while ensuring that, in all material respects, the scheme is being managed in accordance with the provisions of the constitutive documents, the NBFC Rules, the Regulations and VPS Rules. Share Registrar Services CDC Pakistan offers Share Registrar Services to facilitate Issuers and their shareholders. The service caters to the growing need of more comprehensive and efficient Share
  4. 4. Registrar Services in the Pakistani Capital Market. It provides a one window solution backed by a country-wide branch network, state-of-the-art IT infrastructure, independent Legal and Internal Audit departments ensuring statutory and regulatory compliances. CDC Pakistan has developed a high-tech Share Accounting System with an exclusive Authority & Security Management System and workflow components. The service offers a composite portfolio of maintenance, registration, verification and direct customer dealing & interaction. IT Minds Limited [Information Technology based consultancy & implementation services] CDC Pakistan launched IT Minds (a wholly owned subsidiary of Central Depository Company) as part of its business diversification strategy to hedge risk by not relying upon one industry and to create synergy and efficiency in response to the increasingly crucial environmental and political considerations. ITMinds provide innovative e-business solutions to companies in partnership with IBM, Microsoft and Gemalto. The company specializes in Capital Market & Enterprise Software Solutions. With the novel use of technologies and expertise, ITMinds is all equipped to deliver high quality solutions in the areas of IT automation, compliance, security and management. New Projects: Centralized Information Sharing Solution for Insurance Industry CDC Pakistan has developed a Centralized Information Sharing Database for the Life Insurance and Takaful industry. The system will facilitate greater efficiencies and transparency within the Insurance Industry by enabling sharing of critical information including acceptance of claim and underwriting of hazardous risks. The system will be implemented in two phases, the first phase of which will cover the sharing of policy holders’ information among the Insurance companies on a Centralized database while the second phase will result in its extension for establishment of a comprehensive Insurance Repository in Pakistan through which insurance policies can be stored in dematerialized form. Investment Portfolio Services
  5. 5. CDC Pakistan is the only non-banking institution entrusted by the State Bank of Pakistan with the membership of Pakistan Real Time Interbank Settlement Mechanism (PRISM) and Real time Gross Settlement (RTGS). The membership will enable CDC to provide custody and settlement services of Government Securities. The current range of GOP debt securities include Pakistan Investment Bonds, Treasury Bills and Ijrah Sukuks, issued by the State Bank on behalf of the Government of Pakistan. Previously these securities were only available by the Bank to a certain category of corporate clientele and the sale was directly handled by Bank’s Treasury Department. General investors will be able to invest in government securities by opening Investor Portfolio Securities (IPS) account with CDC through partner brokers. IPS account will enable retail investors to maintain custody of their investing securities directly with CDC and avail high returns with zero investment risk. Back Office Accounting for Mutual Fund Industry CDC Pakistan is in final phases of launching Back Office Accounting System for the Mutual Fund Industry. The system will facilitate Mutual Fund companies to outsource their non-core back-office functions such as fund accounting and valuations to CDC including the calculation of the net asset value (NAV). Currently, Mutual Fund companies in Pakistan have their own staff doing fund accounting and valuations which is tedious and prone to several errors and litigation risks. With the inception of the system, mutual fund companies will be able to safeguard their interests by outsourcing their back office functions including settlement, custody, accounting and reporting. Business Continuity Program: CDC is one of the first few Pakistani institutions to establish a comprehensive Business Continuity Program (BCP) to ensure readiness of responding to disaster situation. Similarly, another major business continuity initiative of digitization of all critical physical records to ensure their safety has been taken alongside. ISO 27001 Certification: CDC Pakistan is certified with the prestigious ISO 27001 standard, the highest Information Security Management System (ISMS) certification in the world for its overall operations including functional, technical and legal aspects.
  6. 6. Corporate Philanthropy: CDC Pakistan is amongst one of the most active entities in the country doing corporate philanthropy whereby it contributes 2.5 percent of profit before tax to various charitable organizations providing healthcare, education as well as doing vocational activities. The Company also encourages its employees to participate in voluntary activities which it considers a duty as a responsible corporate citizen. For further information, please visit