Making it big through innovation and diversificationDocument Transcript
Making it Big through Innovation and Diversification
LEADING FROM THE FRONT
Muhammad Hanif Jakhura (pictured right) is the CEO of Central Depository Company of
Pakistan Limited (CDC), the country’s only securities depository serving all three stock
exchanges of Pakistan. Hanif being part of the depository from day one and actually the first
employee of the entity recounts the journey of the company from a rudimentary depository to a
world class organization and a role model for other entities in the capital and financial market as
well as its counterparts in innovation.
CDC came into being after legislation of Central Depositories Act in 1997 to cater the settlement
issues faced by the capital market constituents with a technology-based solution. It was the time
when existing trade settlement mechanisms were no longer able to sustain the burden of
increasing trade volumes and an entirely new system was developed for electronic custody and
settlement of securities. The introduction of a technology-based solution in a market accustomed
to manual processes was an arduous task where tangibility of currency and stamping of
certificates were considered as the only signs of authenticity.
The company in order to overcome these challenges focused on building a strong brand image
and introduced benchmarking mechanisms that enabled the company gain a strong position in the
hearts and minds of its customers, building on a reputation as an ‘Ultimate Custodian’ being at
the forefront of Capital market development.
AUTOMATION BEING THE PRIMARY DRIVER
Imbued with the spirit to revolutionize, which is the key foundation behind existence of CDC, the
company brought unprecedented advancements in the Capital Market with new products and
solutions streamlining processes. The company developed National Clearing and Settlement
System (NCSS) for providing centralized clearing and settlement services to the Pakistani capital
market which it operated from 2002 to 2005 and then handed over to an independent
Being the largest and most preferred provider of Trustee and Custodial Services in the private
sector and realizing the need to provide efficient and automated solution to the trustee clientele,
the company launched a comprehensive Fund Management System, an electronic system for
Straight Through Processing (STP) for settlement of transactions. The solution provides online
link between the Trustee & Custodial Services at CDC and Asset Management Companies &
Adding yet another channel for increased Customer Convenience, the company launched CDC
Access that enables investor account holders to access their account information through multiple
channels including Web, SMS and IVR.
Similarly, CDC has taken a step further and developed a high-tech Share Accounting System with
Authority & Security Management System and workflow components for efficient R/TA services
to achieve competitive edge over other service providers.
These initiatives have made a remarkable difference on how the market operates, introducing new
service levels and at the same time enabled the company to increase transparency, efficiency,
reliability and enhance governance using technology.
FILLING IN THE GAP
The depository felt that a large number of Investors wanted a dependable custodian and only
wished to use the brokerage community for trading purposes. Since the banks were not very eager
to play that role, a relatively unique service was launched in 1999 by the name of Investor
Account Service (IAS) which allows retail investors to directly open and maintain accounts with
CDC in Central Depository System.
Through this service, Investors have direct access to their securities, which are maintained by
CDC and operated on the instructions of investors. 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 of investors.
Introduction of such an indigenous service not offered by any other depository is indicative of a
company’s willingness and capability to fulfill the needs of the local market enabling the
company to gain such a large share of the market. Such initiatives are necessary for catering
specifically to a well-defined target audience.
DIVERSIFICATION ENSURED SUSTAINABILITY
It takes an inherent desire to make a difference that inspires an institution to challenge the
traditional boundaries. CDC not only established itself on the best principles, but also diversified
its business keeping in mind the need of efficient capital market services in a number of areas.
Apart from the core depository services, CDC is now also known for its Trustee and Custodial
Services for mutual and pension funds, Investor Account Services providing retail investor
accounts, Share Registrar Services and IT Consultancy & Implementation Service by the name of
This business related diversification enabled the company hedge risk by not relying upon one
service and create synergy and efficiency in response to the increasingly crucial environmental
and political considerations. The company has nevertheless achieved distinction by diversifying
and developing new service offerings and at the same time able to manage leading position in
almost all of them.
INVESTOR PROTECTION & CONVENIENCE
CDC’s philosophy is based upon a basic principle that customer services is not just about meeting
customer expectations but exceeding them. Investor protection is necessary to harness the
investor’s confidence and experience, it is imperative to have sound investor protection and
facilitation procedures in place that not just meet investor’s expectations but exceeds them.
The lifecycle model of CDC is based upon proactive approach that rotates around investor. The
company ensures that all investment applications are dealt expeditiously, transparently and
equitably and further enhanced by the availability of quality physical infrastructure, high-standard
business processes and talented and flexible work force enabling the company maximize
effectiveness through all stages of the investment cycle.
LEARNING FROM OTHERS
In response to an increasingly unpredictable and dynamic business environment, CDC
continuously enhanced its knowledge and capabilities to develop collective as well as individual
learning to achieve better results.
The company is an active member and also in executive committee of Asia-Pacific Central
Securities Depository Group (ACG), an international organization working to facilitate the
exchange of information and to promote mutual assistance among member securities depositories
and clearing organizations in the Asia Pacific region.
It is also a member of Association of National Numbering Agencies (ANNA) and the only
National Numbering agency in the country, South Asian Federation of Exchanges (SAFE) and
International Securities Services Association (ISSA).
To avail benefits of cross-border cooperation, explore avenues of mutual assistance and enhance
coordination with international depositories, CDC has signed ten Memorandums of
Understanding (MoUs) with regional and international depositories. These include:
Korean Securities Depository (KSD)
Japan Security Depository Centre (JASDEC)
China Securities Depository and Clearing Corporation (SD&C)
Indonesia Clearing & Guarantee Corporation (KPEI)
Depository Trust & Clearing Corporation (DTCC), U.S.A.
Thailand Securities Depository (TSD)
Central Securities Depository of Iran
Abu Dhabi Securities Market (ADSM)
Dubai Financial Market (DFM)
Taiwan Depository & Clearing Corporation (TDCC)
These MoUs entail cooperation in the areas of technology exchange, operational procedures,
mechanism for cross-border listing of securities and exchange of information.
These affiliations, MoUs, techs and practices help the company to learn from each other’s
experience so there is no need to reinvent the wheel.
HIRING THE RIGHT PEOPLE
Recognizing the role and importance of human resource management in the workplace has long
become one of the dire needs for thriving organizations worldwide. Similarly, the demand for
qualified and trained employees is rising in every industry discipline. Organizations are micro-
scoping every opportunity to find, recruit, train and develop high quality human resource.
Central Depository Company of Pakistan Limited (CDC) deals with such demands by not only
hiring highly qualified and trained individuals but is now also adopting international best
practices ensuring that the right talent is retained and groomed.
MAKING IT WORK – INVESTOR FOCUS
A strong brand image is necessary to occupy a distinct image in the minds of consumers.
Information Technology (IT) should be used as an enabler and not just a support. You
can do wonders and achieve something which is unthinkable.
Diversification helps hedging the risk in response to the increasingly crucial business and
Investor protection and facilitation ensures that all investment applications are dealt
expeditiously, transparently and equitably. This should be the key driver for sustainable
Collaboration helps in achieving what appears improbable
Learning from others speeds the growth and fuels innovation allowing organization to
adapt to changes in the state of the market, technology and practices worldwide.
Hiring the right people. New problems and challenges can be met faster by ensuring that
the right talent is retained and groomed.