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Investors Forum urges regulators not to extend deadline for full-fledged CDS implementation
ShareSansar, October 13:
Nepal Investors Forum has taken exception to the plan of CDS and Clearing Limited to delay the full-fledged implementation of CDS system by six months.
Issuing a statement today, the Investors Forum has stated some media reports that states that CDSC has written to the Securities Board of Nepal (Sebon) to extend the deadline for full-fledged implementation of CDS system has drawn its serious attention.
“It is unfortunate that Instead of pushing for its own CDS by-laws that requires mandatory CDS implementation within six months from the first demat trading, CDS is now trying to defer the full-fledged implementation of CDS,” said Raj Kumar Timilsina, the president of the Investors Froum.
The first demat trading was held back in April 15.
This sudden move from CDSCL comes at a time when Nepse has already conducted the mock trading and settlement of demat share on September 26. 2,000 transaction of three listed companies were successfully conducted on the mock trading day.
“This shows CDSCL’s resistance to change for better,” Dipendra Agrawal, an executive member of the Investors Forum told ShareSansar. “Sebon should not agree to CDSCL’s plan to extend the deadline for the full-fledged implementation of CDS by six months. It could demoralizing investors and adversely affect the market.”As per the initial plan, CDSCL, a subsidiary of Nepal Stock Exchange Limited (Nepse) was to implement demat form of share trading of the banking group from October 8, which it has done. Those having their stocks of banks on physical form can sell it on the same format, but the buyers will receive it only in the dematerialized form. And in the second phase, CDSCL was planning full-fledged implementation from October 23.
The Investors Forum has strongly urged Sebon not to extend the deadline for the full-fledged implementation of CDS system, stating that any such move will further affect the market at a time when more and more investors were opening demat accounts expecting full-fledged CDS operation within a few weeks.
The Investors Forum has further expressed dissatisfaction over the slow pace of CDS implementation even three years after the establishment of CDSCL.
“Nepal Investors Forum strongly urges the concerned regulators to issue strong directive for mandatory CDS implementation with the stipulated timeframe,” reads the statement.
According to the procedures on dematerialization of physical shares 2071 unveiled by the Nepse, the buyer clearing member should acquire the physical certificate of the shares within T+5 days after completing the settlement process within T+3 days.
The clearing member should submit the demat request form (DRF) to the CDS and Clearing Ltd (CDSCL) within T+7 days.
Once the CDSCL receives the DRF, it will submit the share certificate to the buyer clearing member within T+9 days after transferring the ownership and putting the seal of ‘Surrender for Dematerialization’.
The buyer clearing member will submit the share certificate to the respective registrar while the depository participant (DP) should collect the DRF from the CDSCL within T+10 days.
DP will have to do the entry of the information as mentioned in the DRF in the CDS. Upon the entry of the information, the DP will receive the Demat Request Number (DRN). The DP will have to submit the DRF including the DRN to the respective registrar.
The RTA will approve the certificate after verifying the DRN through the CDS on the same day or another day of receiving the share certificate and DRN on the DRF from the DP. As soon as the RTA approves, the share will be credited in the demat account of the buyers.
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