CDS facilitates electronic share ownership

The Central Depository System regulation went into effect Wednesday paving the way for the establishment of CDS companies. The Securities Board of Nepal, which recently endorsed the regulation, will be implementing it. "With the opening of CDS companies, share ownership transfers will be done electronically instead of manually as is being done presently," said SEBON. As the CDS facilitates electronic record keeping of the data related to the listed companies and their stock besides the accounts of the shareholders, ownership transfer and share trading can be done in a flash.

Although the Nepal Stock Exchange automated trading on Aug. 24, 2007, the clearance and settlement of transactions are still being done manually. "If things go smoothly, the CDS company will come into full-fledged operation within this fiscal year," said Surbir Poudel. "It will not take much time as the process of establishing the company was progressing simultaneously with the CDS regulation." SEBON and NEPSE are working to establish the CDS system with the technical assistance of Central Depository Services India Limited. NEPSE will be a major stakeholder in the company along with the listed companies and security traders (merchant banks and stockbrokers). As per the regulation, the stock exchange, commercial banks, citizen investment trust, foreign institutional investors, non-banking financial institutions, depository participants and firms referred by SEBON with a minimum net worth of Rs. 200 million can hold shares in the CDS company. According to a NEPSE official, NEPSE has agreed in principle with eight prominent commercial banks and the Citizen Investment Trust to promote a CDS company. A draft of the memorandum of association and the articles of association of the proposed company has already been prepared, added the official.

Source:
ekantipur