| How does it affect us?
How does it affect Investors?
- Investors are able to hold their securities in dematerialised form in a CDBL account; this removes the problems associated with physical certificates.
- Investors must have dematerialised securities in their account before they instruct a stock broker to sell.
- Securities resulting from a stock exchange bought trade will automatically be added to the investors account.
- Investors may rematerialise their securities or they may instruct their stock broker to transfer them to their account with another participant or to a direct depository account.
- Securities in the account may be pledged to a bank or other financial institution without the need to withdraw them from the depository system.
- Investors, who have accounts in their own name, may request CDBL to issue them with a statement (to confirm the information given to them by their participant).
How does it affect Issuers?
Issuers will need to:
- establish communication links with CDBL;
- partition their registers into a certificated portion and a depository portion; no certificates may be issued for balances on the depository portion;
- process valid demat requests by:
- moving the securities from the certificated portion of the register to the depository portion of the register;
- confirming the demat to CDBL (through the communication link); and
- reconciling the balance shown on the depository portion of his register with the figure available from CDBL;
- process valid remat requests by:
- moving securities from the depository portion of the register to the certificated portion;
- confirming the remat to CDBL and reconciling (as above);
- issuing a certificate in respect of the holding on the certificated portion of the register;
- treat investors who are account holders at the record date for benefits (or for eligibility for voting) as members of the company (as required by the Law).
How does it affect Stockbrokers?
Stock brokers will need to become direct or indirect depository participants.
Direct depository participants will need to establish communication links with CDBL.
They will also need to:
- sign agreements with clients who wish to hold securities in CDBL accounts;
- ensure that securities are dematerialised before they accept a sell order from a client and:
- move securities from the client account to their settlement (clearing) account if the client holds their account through them; or
- receive securities (in dematerialised form) from a direct depository account or a third party account;
- match a transaction with the client's custodian to ensure that securities are moved on or prior to the relevant settlement day to their clearing account;
- move securities to the account of a client (or rematerialise them) following settlement of a bought trade
CDBL does not handle funds and therefore payment arrangements between stock brokers and their clients are not changed by the introduction of the depository.