CDSC to be fully operational

Transfer of dematerialised shares has become less expensive for investors due to the recently amended bylaws of CDS and Clearing Ltd (CDSC) as it is ready to start electronic settlement and clearance of share transactions. CDSC has fixed a flat rate of Rs 25 for dematerialised share transfer irrespective of the quantity transferred in the amended bylaws. Earlier, it had allowed depository participants (DP) to charge either Rs 20 or 0.25 per cent of the transferred amount, whichever was higher. Since 0.25 per cent of the share value in transfer would have become a substantial amount, investors had been strongly opposing the fee structure. "We have amended the necessary clauses so that we can increase participation of investors in automated share clearing and settlement," said chief executive officer of CDSC Subodh Sharma Sigdel. CDSC also got its Clearing and Settlement Bylaws 2069 endorsed by the capital market regulator ¿ Securities Board of Nepal (Sebon) ¿ yesterday. Nepal's first central depository is now, finally, ready to become fully operational. "We will be fully operational starting April 15 and start automated clearing and settlements of already registered shares belonging to investors with demat accounts," informed Sigdel. "CDSC had begun the settlement and clearance of dematerialised shares of a few companies that have registered their shares last week which was successful, so we are fully confident," he added. CDSC has already adjusted its software to accommodate the current tax and fee structure. It has also revised the annual fee for listed companies, although it has not changed the initial registration fee. Based on the paid up capital, the annual fees range from Rs 50,000 ¿ minimum rate for companies with paid up capital of up to Rs 200 million ¿ to Rs 500,000 for companies with paid up capital of more than Rs 10 billion. However, the revised bylaws have hiked up the listing and annual fee for debentures, bonds and preference shares compared to the earlier version. Mutual funds and other securities instruments will have to pay anything between Rs 50,000 and Rs 300,000, based on the size. Likewise, the new bylaws have also enhanced the depository participants' capacity to hold shares in their custody. DPs can now hold shares worth 500 times their net worth on behalf of beneficial owners. Earlier, DPs were allowed to hold up to 200 times their net worth. "We are hopeful that these amendments will speed up CDSC's attempts at becoming fully operational," pointed out Sigdel. However, the absence of listed companies that have yet to dematerialise shares is posing as the biggest impediment in CDSC operation. Among the 225 listed companies at the stock exchange, only six have registered at CDSC for dematerialising shares. Regulation requires the companies to get their shares dematerialised by mid-July this year, so by the beginning of next fiscal year shares traded at Nepse will be settled automatically within four days of trading," said Sigdel. source:www.nepalsharemarket.com