The eighth ACG Cross Training Seminar Merits De-Merits of Direct In-Direct Accounts in the Pakistan Capital Market

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The eighth ACG Cross Training Seminar Merits & De-Merits of Direct & In-Direct Accounts in the Pakistan Capital Market by: Shabnam Fahim Syed Faisal Hashmi Shariq Naseem

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Agenda Pakistan Capital Markets. Focal Depository Company of Pakistan Merits and Demerits of Direct and Indirect record Method

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Pakistani Capital Markets Market controllers Stock Exchanges Instruments Traded Trading Environment Clearing and Settlement Past Brief and Current Situation

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Market Regulators Securities & Exchange Commission of Pakistan (SECP) Regulating stock trades, NBFCs, CDC and Corporate Sector Functional Responsibility: confining of standards and controls Recent improvements, REIT, VPS, NBFC rules, obligation showcase State Bank of Pakistan (SBP) Regulating keeping money establishments Policy measures Monetary Credit Foreign trade component

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Stock Exchanges Three Stock Exchanges in Pakistan: The Karachi Stock Exchange Lahore Stock Exchange Islamabad Stock Exchange The Stock Exchanges: Most dynamic and Liquid-KSE Self administrative body

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Instruments Traded Equity Ordinary Shares Preference Shares Bonds TFCs Other Debt Instruments-TBs, PIBs Derivatives Stock Exchange offers value prospects Monthly contract-cover of no less than 2 exchanging days b/w contracts

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The Trading Environment Equities All Stock trades have possess exchanging stages Automated Trading System: Processing in view of offers & offers and Intimation of exchanges executed Circuit Breakers-5% Bond Market Primary Market PIBs Auctioned month to month & TBs fortnightly TFCs by Pakistani Companies Secondary Market PIBs and TBs exchanged uninhibitedly Investors hold TFCs until development low liquidity

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Clearing and Settlement Clearing Government securities through SBP Others through National Clearing Corporation Scrip less Settlement System T+3 Payment discharged merchant determines stock exchange CDC A/c OTC No formal sorted out market Physical Less than 1% Settlement

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KSE Current Situation Pakistan Included in MSCI Emerging Market file May 2005 World Bank-Investment report 2005-one of main ten reformer nations Market capitalization-$ 57 billion with 663 securities (April 17, 06) 4 th year-one of the best performing markets-Business Week-US daily paper, USA today Past four years compound yearly development rate-56% KSE100 share file expanded 53.6% July 05 - May 06 - 3 rd most astounding Capital markets uncommon execution – Reasons Pakistan Economic Revival-GDP development 2002 onwards Consistent and straightforward financial strategies Successful privatization handle PTCL/National refinery and so on Impressive Corporate Results Sound Monetary Polices-SBP, & Capital Market changes SECP

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CDC ... … the Country's lone Securities' Depository

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Central Depository Company (CDC) Incorporated in 1993 To oversee and work the Central Depository System (CDS) Live Operations in 1997

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Our administrations Depository Services Trustee and Custodial Services Registrar & Transfer Agent (in not so distant future)

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Legal Framework Companies Ordinance Central Depository Company Regulations Central Depositories Act Listing Regulations

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Achievements Implementation of National Clearing & Settlement System Launch of trustee and custodial administrations Launch of Investor Account Services Launch of upgraded variant of CDS ( e CDS) Induction of Open-end Mutual Funds in CDS Launch of CDC call focus CDC Access

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Securities took care of through CDS Ordinary Shares Preference offers Term Finance Certificates of Open-finished common Funds Certificates of Closed-end Funds Modaraba Certificates

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Transactions Supported through CDS Deposit of Securities Delivery (Transfer) of Securities Withdrawal of Securities Pledge Corporate Action Merger/De-merger Consolidation/Split Conversion IPO Issuance and Redemption of Open End Mutual Fund Units

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CDS Elements

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Account Holders Account Holders Account holders have guide access to the CDS & are permitted to keep their helpfully claimed securities in CDS . Members Participants likewise have guide access to CDS and are permitted to give care administrations to their customers notwithstanding keeping their helpfully claimed securities.

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Account Categories Main Account – Transitory Account House Account – Account Holder's own record Sub Account – Client Account IAS Account – Client Account

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Account Structure Central Depository System (CDS ) Account Holder Account Holder Participants Main A/C Main A/C Investor A/C . House A/C House A/C Sub-A/C

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Direct Account Member Stock Exchanges Financial Institutions Qualified speculators that meet: Technical necessities Business Integrity prerequisites Capacity prerequisites having Data Processing & Operational Capabilities Indirect Account Any individual or corporate element. Affirmation Criteria

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Merits & De-Merits of Direct & In-Direct Accounts

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Benchmarking Forthcoming slides would give you the conduct of Direct & In-direct Accounts, taking diverse critical parameters of Capital Markets as the Yardstick. We would dissect the benefits & de-benefits of both the sort of records, by putting each of them exclusively, in various element Capital Market movements. This practice would permit us to decide the adequacy of every kind of record in a more functional & sensible milieu.

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Cost

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Efficiency In-Direct In the dynamic Capital Markets, reliance Is constantly regarded as a Shortcoming. Regardless of how productive your Custodian is, you stay reliant on them and reliance is not prudent.

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Confidentiality

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. Clearing

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Settlement

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Compliance & Audit

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Risk Management & Security

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Information

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Global Operations

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Maintenance & Convenience

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Registration

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Entitlements

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Value Added Services

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Thank You!  Shabnam_fahim@cdcpak.com Faisal_hashmi@cdcpak.com Shariq_naseem@cdcpak.com

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