June 06 - 12, 2005

The Central Depository Company, the only Securities' Depository Company established with a view to operate and maintain the central depository system as an electronic book entry system to record, maintain and transfer securities. Obviously, the purpose is to ensure that investor accounts are safe and secure as they are directly maintained by CDC. Hence, the investors have direct and complete control over their book entry securities.

With this brief introduction, M. Hanif Jakhura, CEO of the company told PAGE that CDC in collaboration with the Securities & Exchange Commission of Pakistan has launched a series of Investment Road shows basically to educate people about investment knowledge to steer their savings towards constructive economic activity and to broaden the base for capital formation in the country.

In fact, it is the lack of knowledge keeping the huge untapped potential investors off the capital market, Jakhura said with a visible confidence in his expressions. Undaunted of the recent eventuality which led to a dramatic market crash in March-April this year, Jakhura said the much talked about crash at the stock market was actually hit the speculators and not the genuine investors. You may hardly find a single stance where the genuine investor was suffered; in fact the saga of crash was authored by those who love to operate on short cuts. However, such events shatter the confidence of the innocent investors by creating a misconception about the share market as a place full of risks, Jakhura remarked.

The consistent economic policies initiated by the present government have paved the way for translating the available human and economic resources into a glorious reality. He was of the view that the economic achievements during past three to four years were actually the preambles of the real growth which is still in the pipeline. There is, however, a dire need to pay a serious heeds towards the core issues of education, law and order and judicial reforms to redirect the wild zeal into productive channels, it is the bridled horse which wins the race, he observed.

Regarding stretching the wings of the CDC in the neighborhood like Middle Eastern countries and India, the CDC chief said that regulatory infrastructure was already there, however, the task of expanding the area of operation across the border primarily calls for listing of intended accounts at both ends by the managements of the stock exchanges.

He said that to give a transparent look to CDC system, the group accounts were done away with from May 1, 2005 which consequently brought an end to benami accounts.

Giving the background, Jakhura said that the SECP had issued directives in January 2005 prohibiting the usage of Group Accounts in CDS. Resultantly, the CDS participants were instructed to transfer the book entry securities out of Group accounts with legal authorization by March 31, 2005, subsequently, this deadline was extended to April 30 and enforced with effect from May 1, 2005.

Actually, the focus of the CDC is to eliminate risk of damaged, lost, forged and duplicate securities, certificates and to brush aside the tedious procedure of verification of securities and transfer deeds resulting in delays in deliveries, settlement and transfer of securities. The electronic system has done away with the tiring procedures involved in pledging of physical securities on one hand while addressing the problems associated with physical custody of securities on the other.

The success story of the CDC was reflected in the impressive results after the road shows organized at Islamabad, Lahore and Karachi and now small towns like Sialkot, Faisalabad, Hyderabad, Peshawar, Quetta are the next destinations for these road shows.

Appreciating the policy of privatization through stock exchange initiated by the government, Jakhura said that this policy helped increasing the market float, leading market capitalization which crossed the $25 billion mark last year, while excellent corporate results added an impetus to the market boom.

He stated that CDC being an infrastructure project of the capital market, optimizing its share from the economic growth both in terms of increase in revenues and business diversification.

Feeling the pulse of the economy, Jakhura agreed that the formidable increase in price inflation may prove counter productive to the efforts of the economic managers to bring financial stability. Though the Central Bank was actively taking corrective measures to arrest the inflationary spiral, yet areas causing multiplier effects on general prices should also be kept in mind while taking remedial steps to curb the inflation. Whether it is the food item or manufactured goods, the elements of costly oil and electricity have their own adverse impact on the general price index. Tax collection was yet another area where judicious reforms are needed to bring an ease to the tax payers. Treating at par should be the name of the game hence income should be taxed whether it is from agriculture, manufacture or services sector to broaden the tax base and to give a breathing space to the existing tax payers, said Jakhura.