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1111thth ACG Cross Training Seminar ACG Cross Training Seminar
33rdrd & 4 & 4thth July 2009 July 2009
Bursa Malaysia and its Group of Companies (“Bursa Malaysia”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used or Bursa Malaysia and its Group of Companies (“Bursa Malaysia”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used or reproduced in any form without the Bursa Malaysia’s prior written permission. This Presentation is provided for information purposes only. Neither the Bursa Malaysia nor the reproduced in any form without the Bursa Malaysia’s prior written permission. This Presentation is provided for information purposes only. Neither the Bursa Malaysia nor the
Presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation.Presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation.
It is your responsibility to verify any information before using or relying on it.It is your responsibility to verify any information before using or relying on it.
Depository ModelDepository Model
AGENDA
IntroductionIntroduction
Legal FrameworkLegal Framework
Duties of Bursa Malaysia DepositoryDuties of Bursa Malaysia Depository
CDS UsersCDS Users
Account StructureAccount Structure
Difference Between Direct & Indirect CDS AccountDifference Between Direct & Indirect CDS Account
Merits For Direct & Indirect CDS AccountMerits For Direct & Indirect CDS Account
Demerits of Direct & Indirect CDS AccountDemerits of Direct & Indirect CDS Account
Depositories ServicesDepositories Services
Page 2 DEPOSITORY MODEL
INTRODUCTION
Bursa Malaysia Depository Sdn Bhd was established in April 1990 and commenced operations in November 1992
Wholly-owned subsidiary of Bursa Malaysia Berhad
Authorised capital of RM50 million and paid up capital of RM25 million
Completed immobilization of all equities & non-equities securities listed on the stock exchange in June 1997
Page 3 DEPOSITORY MODEL
LEGAL FRAMEWORK
Securities Industry (Central Depositories) Act 1991 {SICDA}.
SICDA empowers the Central Depository to draw up the rules of Bursa Malaysia Depository and the issuance of any directions.
Bursa Malaysia Depository Nominess Sdn Bhd is deemed as a bare trustee
Share registrar to issue certificate in the name of Bursa Malaysia Depository Nominees Sdn Bhd
Undeposited securities not to be traded on stock exchange or utilised to settle market trade
Page 4 DEPOSITORY MODEL
SALIENT FEATURES IN CDS
Account maintained at client level and must be under the Account maintained at client level and must be under the
name of beneficial owner or Authorised Nominees name.name of beneficial owner or Authorised Nominees name.
Account are tagged with Stock Broker where the account was Account are tagged with Stock Broker where the account was
openedopened
Mandatory deposit - Mandatory deposit - 100% immobilisation rate100% immobilisation rate
Transfer of Securities within the “Approved Reasons to Transfer of Securities within the “Approved Reasons to
Transfer”Transfer”
No Withdrawal of securitiesNo Withdrawal of securities
Page 5 DEPOSITORY MODEL
CDS USERS
Provides depository services to the following users through the Central Depository System (CDS):-
Authorised Depository Agent (ADA)
Authorised Direct Member (ADM)
Issuer
Issuing house
Share registrar
Account holder / depositor
Clearing House
Page 6 DEPOSITORY MODEL
CDS USERS
Page 7 DEPOSITORY MODEL
Bursa MalaysiaBursa Malaysia
Securities BerhadSecurities Berhad
Bursa Malaysia Securities Bursa Malaysia Securities Clearing BerhadClearing Berhad
• Record of DepositorsRecord of Depositors
• Corporate ExerciseCorporate Exercise
• Allotment DetailsAllotment Details
• Certificate in the name of Bursa Malaysia Depository Certificate in the name of Bursa Malaysia Depository Nominees Sdn Bhd Nominees Sdn Bhd
Page 8
ACCOUNT STRUCTURE
Direct Account :
held directly in the name of individual, corporate body, institutional investors and etc.
Indirect Account :
held in the name of nominees where the beneficial owner details are captured
one nominee account one beneficial owner
nominees account can only be opened by Authorised Nominees i.e. bank/ broker/trust companies
Certain relaxation was introduced whereby nominee company can operate omnibus account effective 21 October 2005.
DEPOSITORY MODEL
Page 9
Direct Account Indirect Account
Account holder open the account with the Brokers i.e. ADA under his name directly
i.e.
John Smith
Depositor open the account with Custodians Bank or Brokers under the name of a nominee company with the depositors as the beneficial owner
i.e.
ABC Nominees (Tempatan) Sdn Bhd
For John Smith
In direct account, the account holder is the owner of the securities in the CDS account. The depositor will be registered as the shareholder
In indirect account, the nominee company is the owner of the securities in the CDS account. The name of the nominee company will be registered as the shareholder.
DIFFERENCES BETWEEN DIRECT & INDIRECT ACCOUNT
DEPOSITORY MODEL
Page 10
Direct Account Indirect Account
Dividend entitlement will be directly mailed to the depositor, while entitlement in shares will be credited directly to the account
Dividend entitlement will be received by the nominee company that in turn will redirect these entitlement to the beneficial owner
Account opened for its own investment and deal with securities using this direct account
Account opened for the following purpose :
1. custodian
2. margin or loan facilities purpose
Requires supporting documents for opening of direct CDS account
Does not require extensive supporting document
The depositor is the operator of the account
The nominee company is the operator of the account
DIFFERENCES BETWEEN DIRECT & INDIRECT ACCOUNT
DEPOSITORY MODEL
Page 11
Direct Account Indirect Account
• Depositors are in a principal relationship with Bursa Depository
• Confidentiality of depositor shareholdings is protected whereby depositor’s share holding is not known to third party
• The ownership of CDS account is transparent
• The asset of depositor and stockbroker i.e. ADA is clearly segregated
• Depositor received his/her annual reports or dividends payout directly from the registrar/issuer
• Lesser documentation to operated such account
• Do not require to be present in person to perform depository transactions
• Cost savings to Bursa Depository arising from the following :
- storage cost due to less documentation to stored
- postage and other related stationeries on mailing of statements/notices as these notifications are send electronically to nominee company
MERITS OF DIRECT & INDIRECT ACCOUNT
DEPOSITORY MODEL
Page 12
Direct Account Indirect Account
• The depositors shareholdings is unaffected in the event the brokers is declared bankrupt
• Depositors received notification directly from Bursa Depository in the event of any changes to its account particulars or movement of securities
• CDS statement of account are issued directly to the depositor
MERITS OF DIRECT & INDIRECT ACCOUNT
DEPOSITORY MODEL
Page 13
Direct Account Indirect Account
• More documentation to operate such account
• To be physically present in person to perform depository related transactions
• Higher operational and maintenance cost for Bursa Depository :
- storage cost for storing documents
- postage and stationeries cost for sending out statements and notices to depositors
• The nominee company is in a principal relationship with Bursa Depository and the beneficial owner details are merely for information
• Depositor shareholding is known to third party
• Depositor do not receive any notification or CDS statement of account directly from Bursa Depository
• Delay in receiving dividend entitlement
• Does not receive notification or annual report directly from the Issuer
DEMERITS OF DIRECT & INDIRECT ACCOUNT
DEPOSITORY MODEL
Page 14
Direct Account Indirect Account
• Incurred additional cost for services Incurred additional cost for services provided by the nominee companyprovided by the nominee company
• Implication to depositor Implication to depositor shareholdings if the nominee shareholdings if the nominee company is declared bankruptcompany is declared bankrupt
• Ownership of account is not very Ownership of account is not very clear.clear.
DEMERITS OF DIRECT & INDIRECT ACCOUNT
DEPOSITORY MODEL
DEPOSITORY’S SERVICES
Core services provided are as follows:-
Account openings
Deposit of securities
Transfer of securities
Withdrawal of securities
Initial Public Offerings (IPOs)
Corporate exercises
Page 15DEPOSITORY MODEL
THANK YOUTHANK YOU
DEPOSITORY MODEL
If you need further information or clarification please contact the following:
Zailan Azhar Baharin
Bursa Malaysia Berhad
2nd Floor, Exchange Square
Bukit Kewangan
50200 Kuala Lumpur
Tel: 603-2034 7750
Email: [email protected]
Website : www.bursamalaysia.com
DEPOSITORY’S SERVICES
Opening of Individual & Corporate CDS Accounts
DEPOSITORY MODEL
Account Management
Balance Enquiry , Enquiry by Name, Enquiry by investor’s IDBalance Enquiry , Enquiry by Name, Enquiry by investor’s ID
Updating of CDS Account ParticularsUpdating of CDS Account Particulars
Suspension/Release Suspension of Account, particular stock or Suspension/Release Suspension of Account, particular stock or
certain balances in CDS accountcertain balances in CDS account
Closing of AccountClosing of Account Consolidation of Statement of AccountConsolidation of Statement of Account Inactive / Dormant AccountInactive / Dormant Account Ad-hoc Statement of Account / Monthly StatementAd-hoc Statement of Account / Monthly Statement End of Day Processing will generate notices to be mailed to the End of Day Processing will generate notices to be mailed to the
relevant depositor on changes to their account particulars / relevant depositor on changes to their account particulars / suspension/release suspension / changes in their account statussuspension/release suspension / changes in their account status
DEPOSITORY’S SERVICES
DEPOSITORY MODEL
DEPOSITORY’S SERVICES
Deposit – Acceptance and Rejection
DEPOSITOR
DEPOSITORY MODEL
Deposit of Securities
Provisional credit is accorded on deposit day itselfProvisional credit is accorded on deposit day itself
Depositor able to utilise the provisional credit for trade settlement Depositor able to utilise the provisional credit for trade settlement
during prescribed period of 1 monthduring prescribed period of 1 month
Registrar will authenticate the certificate deposited and revert to Registrar will authenticate the certificate deposited and revert to
Depository within 7 market daysDepository within 7 market days
End of Day processing will generate notices to depositor in event End of Day processing will generate notices to depositor in event
any deposit is rejectedany deposit is rejected
DEPOSITORY’S SERVICES
DEPOSITORY MODEL
DEPOSITORY’S SERVICES
DEPOSITOR
DEPOSITOR
Transfer – Acceptance and Rejection
DEPOSITORY MODEL
Transfer of Securities
Transfer of securities is real timeTransfer of securities is real time
Transfer must be within the “Approved Reasons for Transfer”Transfer must be within the “Approved Reasons for Transfer”
Exception reports are generated to monitor transfer in CDSException reports are generated to monitor transfer in CDS
End of Day Processing will generate notices to the relevant transferor’s End of Day Processing will generate notices to the relevant transferor’s
and transferee’s and transferee’s
DEPOSITORY’S SERVICES
DEPOSITORY MODEL
Withdrawal of Securities
DEPOSITOR ADA CD Registrar
Withdrawal request
Ack.
Document
Confirmation
Registration
Confirm/Reject
Withdrawal Notice from
Bursa Malaysia Depository Sdn Bhd
Deliver Certificate in depositor’s name
DEPOSITORY’S SERVICES
DEPOSITORY MODEL
Withdrawal of Securities
Only permitted for “Delisted” securitiesOnly permitted for “Delisted” securities
Certificate will be issued and mail directly to the depositor within 14 Certificate will be issued and mail directly to the depositor within 14
market days by the share registrarmarket days by the share registrar
End of processing will generate notices to the relevant depositors on the End of processing will generate notices to the relevant depositors on the
successful withdrawal requestsuccessful withdrawal request
DEPOSITORY’S SERVICES
DEPOSITORY MODEL
Initial Public Offerings (IPOs)
APPLICANTISSUING HOUSE
BURSA DEPOSITORY
Submit application
yes
confirmationmail notice of allotment to successful applicant
Submit detail of successful applicant
Verify details
Credit the applicant’s CDS account
Rectify & Resubmit no
ISSUING HOUSE
DEPOSITORY’S SERVICES
DEPOSITORY MODEL
Initial Public Offerings (IPOs)
Mandatory to have a CDS account to participate in Initial Public OfferingsMandatory to have a CDS account to participate in Initial Public Offerings
Apply an IPO by completing the prescribed Application Form or via Apply an IPO by completing the prescribed Application Form or via
“Electronic Share Application” (ESA) or via Internet Application“Electronic Share Application” (ESA) or via Internet Application
ESA able to apply via Automated Teller machineESA able to apply via Automated Teller machine
CDS account of successful applicant will be credited 2 market days CDS account of successful applicant will be credited 2 market days
before listingbefore listing
DEPOSITORY’S SERVICES
DEPOSITORY MODEL
Corporate Action
SHARE REGISTRAR
BURSA DEPOSITORY
Provide ROD
yes
confirmation
mail notice of allotment to successful applicant
will mail entitlement
i.e. dividend
Verify details
Rectify & Resubmit
no
SHAREHOLDER ACCOUNT HOLDER
Credit into CDS account
for entitlement in shares i.e. Bonus/Rights, submit details to Bursa Depository
SHARE REGISTRAR
DEPOSITORY’S SERVICES
DEPOSITORY MODEL
Corporate Action
Bursa Depository provide Record of Depositors (ROD) as at book Bursa Depository provide Record of Depositors (ROD) as at book
closure date of a corporate action to issuer/share registrar to ascertain closure date of a corporate action to issuer/share registrar to ascertain
the entitlement to be distributedthe entitlement to be distributed
All entitlement in shares to be credited to the depositors accountAll entitlement in shares to be credited to the depositors account
Dividend is distributed to share holder by the registrar/issuer by mailing Dividend is distributed to share holder by the registrar/issuer by mailing
to them or crediting their bank accountto them or crediting their bank account
DEPOSITORY’S SERVICES
DEPOSITORY MODEL