The Central Depository Company (CDC) has come a long
way since commencing operations in 1997 by introducing countless number
of services. It has also cut down tariff substantially over the years to
deliver the benefits of the electronic system to the investors. Lately,
it introduced another service whereby investors will be able to deposit
their physical securities in the Central Depository System (CDS)
directly through their own investor accounts. This will not only reduce
the burden of deposit requests on the participants, but will also offer
cost-effective and efficient service to the investors.
In his key note, Dr. Tariq Hassan, Chairman,
Securities and Exchange Commission of Pakistan (SECP), praised the role
being played by CDC in the development of capital market. He stressed on
the importance of measures required for building confidence of small
investors in the market and also highlighted that reforms introduced by
SECP would go a long way to meet the end. He also emphasized that CDC,
financial institution, stock exchanges and brokerage houses have to work
hand in hand to attract small savers to the capital market.
He said, "Retail investors have a key role to
play in broadening and deepening of the market, broad-basing equity
ownership, and re-directing household savings into more productive
channels. These small investors may be allowed greater access to the
market through the development of remote trading terminals and the
development of Internet trading/online trading facilities. All the
efforts which stock exchanges, brokerage houses, financial auditors and
the listed companies have made and have to continue with, need an
infrastructure, that CDC provides."
Though, the brokers fraternity never accepts the
fact, Chairman did not hesitate in pinpointing it before the august
gathering. He said, "In expanding the investor base of the market,
the most crucial prerequisite is building confidence of retail investors
in the market. There is generally a feeling of distrust among the retail
investors. A lingering perception exists that a few big players run the
market and small investors may loose their savings by entering the ring.
The challenge for all of us is to change the perception."
Earlier Hanif Jakhura, Chief Executive Officer of CDC
said, "The CDC is playing a vital role in increasing the average
daily turnover of Karachi Stock Exchange (KSE). Prior to the
establishment of CDC, trading volume of over few million shares was a
big problem due to settlement problems. As against this when a record
turnover of over one billion was achieved recently all the settlements
took place without any problem whatsoever."
Outlining the Investor Account Service, Jakhura said
that such an account gives individual and corporate clients complete
control over their respective securities' portfolio with direct access
and transparent handling. The service was initiated in 1999 and has now
around 13,500 accounts having three billion shares representing market
capitalization of approximately Rs 140 billion.
In his opening remarks Wahab Kodvavi, Chairman of CDC
said that the Deposit Functionality would give enormous benefits to the
investors as well the participants, offering one-window service to
dematerialize and hold securities under their own control. The Investor
Account Service is currently available in Karachi, Lahore and Islamabad,
but CDC is working to offer it in all the major cities of Pakistan as
well as from some Middle Eastern countries through selected banks.
It is necessary to reiterate a point that by this
time most of the institutional investors hardly have any stock of
physical securities. This service is aimed at catering to the needs of
small investors. Some of the investors are of the view that the charges
for opening and maintaining investor account are a little high and must
be brought down.