CDS stuck in limbo

Expected to come into operation by mid-August, the much talked about CDS and Clearing Limited is now in limbo. Established as a subsidiary company of Nepal Stock Exchange (Nepse) to provide a centralised depository, clearing and settlement services, the company failed to obtain operating licence from Securities Board of Nepal (Sebon), the regulator. Officials from both institutions¿Sebon and CDS¿are pointing at each other for the delay. Sebon officials say CDS did not include some crucial documents of its board members in its application for the licence. The missing documents, according to Sebon, are Permanent Account Number (PAN), Certificate of Tax Payment and Experience Certificate of CDS board members. “Without these documents, Sebon can’t issue operating licence,” said Paristha Nath Poudyal, legal department head at Sebon. “We have already dispatched letter to CDS raising the issue.”

SEBON officials say a final decision in this connection will be taken during Sebon’s board meeting to be held within a week. On the other hand, CDS says as a subsidiary of Nepse¿a government entity¿Sebon can grant it the licence without the aforementioned documents. “CDS board members are not its investor, but representatives sent by Nepse. So, demanding such documents is not a rational idea,” said Subodh Sharma Sigdel, chief executive officer of CDS.

CDS facilitates electronic record keeping of securities related data, including the numbers and types of shares issued by listed companies, besides the number of shares held by individual investors, forming an electronic data bank. Sigdel said all the hardware and software for CDS are ready and they are undergoing final testing. “We are just waiting for the licence. Once we get it, we will start creating demat accounts for shareholders, which is essential for trading,” said Sigdel. After demat accounts are created, the entire share portfolio of a shareholder is stored in his/her demat account and that s/he does not have to keep shareholder’s certificate. After CDS comes into operation, transfer of all the shares traded in Nepse and settlement of the cash will be made through the demat account of shareholders concerned.

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