April 14 -20, 2003 



Obtained Bachelor of Commerce degree from the University of Karachi in 1984. Completed audit training with A.F. Ferguson & Co., Chartered Accountants (member firm of PRICEWATERHOUSECOOPERS). Became associate member of the Institute of Chartered Accountants of Pakistan (ICAP) in 1991 and obtained membership of the Institute of Corporate Secretaries in 1993. Admitted as fellow member of ICAP in January 2002.

Over ten years experience at middle and senior management positions which include more than seven years in number two position in the Central Depository Company of Pakistan Ltd. Was appointed Chief Executive Officer of National Clearing Company of Pakistan Ltd. (NCCPL) on January 02, 2002 and as Chief Executive Officer of CDC in March, 2002.

Has been instrumental in the development of the Capital Market since joining CDC in 1994. Has visited various depositories and attended international conferences and meetings. Represented CDC in various international organizations in which CDC is a member.

PAGE: How do you review the performance of CDC over the years?

HANIF JAKHURA: The Central Depository Company of Pakistan Limited (CDC) implemented the Central Depository System (CDS) five years back on September 3, 1997. Prior to the implementation of CDS the market players were facing following difficulties in handling and managing shares and settlement process. Problems faced by investors were: 1) delay in transfer of ownership, 2) cost of stamp duty 3) delay in receipt of entitlements, and 4) lengthy and tedious procedure involved in pledging of physical securities. Problems faced by the brokers included: 1) voluminous back office work, 2) tedious, inefficient and unreliable means to settle securities transactions, 3) problems of handling larger volumes, and 4) maintenance of huge vaults for safe keeping of certificates. Issuers faced problems like: 1) lengthy and tedious activities undertaken at the time of book closure, 2) hassles of dispatch and printing of certificates at the time of new allotments or bonus, 3) risks of damaged, lost, forged and duplicate certificates, 4) capital and time investment for issue and dispatch of share certificates, cash dividend, bonus and right issues, 5) tedious process for launching of new issues, and 6) lengthy and time consuming process of mergers/demergers. The concept of implementing CDS was introduced by USAID and their report highlighted all the issues mentioned above. Then the market participants got together and formed CDC. The sponsors are Karachi Stock Exchange, Lahore Stock Exchange, Citibank Overseas Investment Corporation, Muslim Commercial Bank, National Investment Trust, Investment Corporation of Pakistan, International Finance Corporation, Pakistan Industrial Credit & Investment Corporation and Islamabad Stock Exchange.



PAGE: What changes the CDC has brought in the way securities are traded in Pakistan?

HANIF: It is indeed pleasure to mention that CDS is one of the largest IT intensive project implemented in last decade. It has connected over 1000 users in the three cities of Pakistan namely Karachi, Lahore and Islamabad. The implementation of CDS ushered in an era of efficient and cost effective settlement process in Pakistan. It not only eliminated the problem faced by the market participants but also improved the efficiency of the capital market as a whole. The current volumes at the stock market in Pakistan would not have been possible without the CDS. The most important thing with CDS is geographical neutrality. It provides same level of efficiency to all clients irrespective of their geographical location. At present over 97% of settlement at the stock exchanges are done through CDS. Realizing the need for providing direct access to the individual investors CDC decided to launch Investor Account Services in 1999, which has been proved successful. Having more than 8000 Accounts opened directly with CDC, the performance of the company can be judged from the fact that there are 418 (including 46 TFCs) live on CDS and nearly 7.3 billion shares having a total vale of Rs 185.6 billion.

PAGE: A large number of securities despite being declared eligible have not become live as yet. How does the CDC intend to overcome this problem?

HANIF: It has been CDC's desire to take all securities in CDS. To achieve this objective we had declared all securities as eligible for CDS in 1998. We are proud to say that all major securities have joined the system since then. However, a large number of securities did not join the system citing value of security deposit the CDC require from the issuer for joining CDC as inhibiting factor. Some of them filed petition with Honourable Lahore High Court. However, the Court dismissed the petition and referred the matter to Securities and Exchange Commission of Pakistan (SECP) to decide as the Regulator of stock market. The SECP has recently passed an order in which they have directed CDC to reduce security deposit and Issuers of Companies to join CDC by July 31, 2003.

PAGE: Which are the sectors posing resistance against getting live and what is the basis of their resistance?

HANIF: So far a large number of textile companies have not joined CDC. However, we have discussed the issue with APTMA and now we are hopeful that textile companies would join CDC by the time line set by SECP.

PAGE: Would the recent reduction in fees encourage these sectors to join the CDC?

HANIF: The CDC not only reduced the security deposit for the companies who have not yet joined but also refunded security deposit to all those who have joined CDC. I think this is a big reduction which should be availed by all and get advantage of becoming family member of it.

PAGE: Do you believe that all the securities will join the CDC and can you define the time frame for achieving the target?

HANIF: I sincerely feel that all companies would join, as the benefits a company and its shareholders get are tremendous.