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Asia-PacificCentral SecuritiesDepositories Group
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Secretariat : MCD & SCANS
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ContentsACG MEMBERS 2
TASK FORCE UPDATE 31. BEST PRACTICE TASK FORCE 32. SETTLEMENT RISK MANAGEMENT TASK FORCE 33. EXCHANGE OF INFORMATION TASK FORCE 44. CROSS BORDER LINKAGE TASK FORCE 45. TECHNICAL TASK FORCE 5
TASK FORCE ACTIVITIES 6
NEWS CORNER 71. CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED 7
A STATUS UPDATE 7ONLINE INTER-DEPOSITORY TRANSFERS 7REDUCING SETTLEMENT CYCLE 7STP INITIATIVE IN INDIA 7
2. JAPAN SECURITIES CLEARING CORPORATION 8CHANGE OF NAME 8
3. SECURITIES CLEARING AUTOMATED NETWORK SERVICES SDN BHD 9CLEARING, SETTLEMENT AND DEPOSITORY CONFERENCE 2002 9
4. MALAYSIAN CENTRAL DEPOSITORY SDN BHD 9 CONSOLIDATED CDS STATEMENT FOR EFFECTIVE PORTFOLIO MANAGEMENT 9
5. THOMAS MURRAY 10UPDATE ON ASSET SERVICING 10CUSTODY AND SETTLEMENT INFRASTRUCTURE RISK RANKINGS 11
Songket’s beauty shines throughthe delicate interweaving of
gold and coloured threads, andthe various designs inspired
by nature.
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The silversmith melts the silver andthen pours the molten metal into abroad and shallow wooden mouldto form various objects.
ACG MembersCountry Depository E-mail Website
Australia ASX Settlement and Transfer [email protected] www.asx.com.auCorporation Pty LimitedSFE Clearing [email protected] www.sfe.com.au
Bangladesh Central Depository of Bangladesh [email protected] NilLtd.
China China Securities Depository and [email protected] www.ssccrc.comClearing Corporation Limited www.sse.org.cn
Hong Kong Hong Kong Securities Clearing [email protected] www.hkex.com.hkCompany LimitedHong Kong Monetary Authority [email protected] www.info.gov.hk/hkma
India National Securities Clearing [email protected] www.nseindia.co.inCorporationNational Securities Depository Limited [email protected] www.nsdl.co.inCentral Depository Services (India) Ltd. [email protected] www.centraldepository.com
Indonesia Indonesian Central Securities [email protected] www.ksei.co.idDepository Indonesian Clearing & Guarantee [email protected] www.kpei.co.idCorporation
Japan Japan Securities Clearing [email protected] www.jssc.co.jpCorporation IncJapan Securities Depository Center Inc [email protected] www.jasdec.com
Korea Korea Securities Depository [email protected] www.ksd.or.krMalaysia Malaysian Central Depository Sdn Bhd [email protected] www.klse.com.my
Securities Clearing Automated [email protected] www.klse.com.myNetwork Services Sdn Bhd
New Zealand New Zealand Central Securities [email protected] www.rbnz.govt.nzDepository
Pakistan Central Depository Company [email protected] www.cdcpak.comof Pakistan Limited
Philippines Philippine Central Depository Inc. [email protected] www.pcd.com.phSingapore The Central Depository (Pte) Limited [email protected] www.sgx.comSri Lanka Central Depository Systems (Pvt) Ltd. [email protected] www.lanka.net/cseTaiwan Taiwan Securities Central Depository [email protected] www.tscd.com.tw
Company LimitedThailand Thailand Securities Depository [email protected] www.set.th
Company LimitedUzbekistan The State Central Depository of [email protected] www.deponet.uz
Securities of the Republic of Uzbekistan
Task Force UpdatesBest Practice Task Force
Members• SFE Clearing, Australia• Central Depository Company of Pakistan Limited• National Securities Depository Limited, India• New Zealand Central Securities Depository• Philippine Central Depository Incorporated• Securities Clearing Automated Network Services Sdn Bhd, Malaysia• The Central Depository (Pte) Limited, Singapore
Convenor• Hong Kong Securities Clearing Company Limited • Email Contact : [email protected]
Objective• Continue to develop best practice guidelines for ACG members• Monitor best practice goals and (Key Performance Indicators (KPI)) of members• Monitor and disseminate information on fee structures
Settlement Risk Management Task Force
Members• Central Depository Company of Pakistan Limited• Central Depository of Bangladesh Limited• Central Depository Systems (Pvt) Limited, Sri Lanka• Hong Kong Securities Clearing Company Limited• Korea Securities Depository• Securities Clearing Automated Network Services Sdn Bhd, Malaysia• China Securities Depository and Clearing Corporation Limited • Taiwan Securities Central Depository Company Limited• Thailand Securities Depository Company Limited• National Securities Clearing Corporation, India
Convenor• Korea Securities Depository• Email Contact : [email protected]
Objective• To develop the understanding of risk management practices• To examine the impact of new trends on settlement risk management
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Hammered out so delicately andbeautifully, the decorative
patterns of Malaysian silverprojects a style that sets it apart
from other silver products.
Exchange of Information Task Force
Members• Central Depository of Bangladesh Limited • Indonesian Central Securities Depository • Japan Securities Clearing Corporation Inc• Japan Securities Depository Center Inc• Malaysian Central Depository Sdn Bhd• National Securities Depository Limited, India• Securities Clearing Automated Network Services Sdn Bhd, Malaysia
Convenor• Japan Securities Depository Center Inc• Email Contact : [email protected]
Objective• Promote the facilitation of the exchange of information • Promote mutual co-operation amongst ACG members• Maintenance of a list of contacts for all ACG members
Cross Border Linkage Task Force
Members• ASX Settlement and Transfer Corporation Pty Limited, Australia• SFE Clearing, Australia• Central Depository Company of Pakistan Limited• Hong Kong Securities Clearing Company Limited• Japan Securities Clearing Corporation Inc• Korea Securities Depository• New Zealand Central Securities Depository• Securities Clearing Automated Network Services Sdn Bhd, Malaysia• Taiwan Securities Central Depository Company Limited• The Central Depository (Pte) Limited, Singapore• The State Central Depository of Securities of the Republic of Uzbekistan• Indonesian Clearing & Guarantee Corporation
Convenor• Japan Securities Clearing Corporation Inc• Email Contact : [email protected]
Objectives• Develop a model of multilateral cross-border linkages based on research of European models and best
practices for linkages
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Beginning during the NewStone Age, Malaysian ceramics
were first made for everydayuse and only later for
decoration.
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Technical Task Force
Members• SFE Clearing, Australia• Central Depository of Bangladesh Limited• Hong Kong Securities Clearing Company Limited• Malaysian Central Depository Sdn Bhd• National Securities Depository Limited, India• New Zealand Central Securities Depository• Securities Clearing Automated Network Services Sdn Bhd, Malaysia• China Securities Depository and Clearing Corporation Limited• Taiwan Securities Central Depository Company Limited• Thailand Securities Depository Company Limited
Convenor• National Securities Depository Limited, India• Email Contact: [email protected]
Objective• Investigate business proposals in relation to technical issues such as e-commerce and security of system
networks
Task Force Activities
Several Task Forces have issued questionnaires for members to provide relevant information, as follows:
No. Task Force Questionnaires Coordinating Member
1. Best Practice Task Force Fee Structure and Organizational Central Depository Structure Company of Pakistan
2. Best Practice Task Force Revisit the Process of Developing Best Hong Kong SecuritiesPractice Guidelines for ACG Members Clearing Company Ltd
3. Technical Task Force Initiatives Taken by CSDs to Reduce/ National Securities Eliminate the Same Data Entry at Depository Ltd., IndiaMultiple Points
4. Technical Task Force Electronic Commerce New Zealand Central Securities Depository
5. Technical Task Force Standardization of Data Transfer and National SecuritiesFile/Message Formats between Various Depository Ltd., IndiaMarket Entities
News CornerCENTRAL DEPOSITORY SERVICES (INDIA) LTD
A Status Update. As of 16th October 2002, CDSL has 4,532 issuers whose securities are admitted for demat.The spread of live depository services through Depository Participants of CDSL and their branches hasincreased to 107 towns and cities. An update of CDSL’s status under various parameters is mentionedhereunder:
Issuers whose securities are admitted to CDSL (equity) 4,532Number of Depository Participants registered 179Number of live Depository Participant connections to CDSL* 395Number of cities/towns having live Depository Participants* 107
* The CDSL system permits branches of a Depository Participant to have on-line connectivity with the CDSLsystem, enabling them to provide the same level of service to the investors as the main branch. The branchwhich the Depository Participant designates as the main branch can control and monitor the functioning ofall branches, by defining the functions permitted to them, and through a comprehensive reporting system.
On-line inter-depository transfers. Presently, CDSL and the other depository in India, effect inter-depositorytransfers of securities twice on each business day. This will, by the beginning of December 2002, make way foron-line inter-depository transfers, where movement of stock between depositories will take place throughout thebusiness day. The experience in linking two different systems on an on-line basis will be an educative experi-ence for both depositories in establishing cross-border linkages in future.
Reducing Settlement Cycles. The Finance Minister, Government of India has announced destination dates forthe Indian capital market to move to a T+2 settlement regime and thence to T+1. It is sought to reach the firsttarget by April, 2003 and to achieve T+1 settlement by April, 2004.
Straight-Through Processing (STP) Initiative in India. With STP being a crucial element in a reduced settle-ment cycle scenario, the securities market regulator, Securities and Exchange Board of India (SEBI) formed aCommittee on STP, comprising of representatives of the country’s central bank, The Reserve Bank of India, themajor stock exchanges, the depositories and leading securities custodians, for designing and recommendingan expeditious solution for electronic transmission of trade information and settlement in the Indian capitalmarkets, across market participants. The Committee’s mandate comprised of three components:* Identification of components of the current life-cycle of a trade that involves manual intervention.* Identifying and establishing messaging standards for information communication.* Identifying options for establishment of a communications backbone that will enable data transfer acrossparticipants in a secure and efficient manner.
Some of the recommendations/comments presented to SEBI by the Committee are as follows: 1. ISO 15022 messaging standards be used as the common messaging structure;2. The first phase of STP implementation should focus on :
a. Connectivity between broker and the custodian (and the fund manager).b. Connectivity between the fund manager and the custodian; and
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For centuries, Sarawakians havebeen using intricately carved baskets
made from “bemban” reeds andbasket making has evolved from a
craft into an art.
3. The Committee also felt the need for carrying out such an activity for the derivatives market andit was recommended that a detailed study of the process flows for the derivatives market also becarried out. SEBI has in turn, announced the road-map for market participants for the STP project.
CDSL, on its part has commenced efforts to incorporate certain features of STP in its Internet services,“Electronic Access to Securities Information” (easi). These include facilities for:
1. Clearing Members to deliver electronic contract notes through the Internet to Beneficial Owners (investors) who have registered for the easi facility through CDSL’s Depository Participants; and
2. Generation of securities delivery instructions for sale transactions on confirmation of contract notecontent by Beneficial Owner.
JAPAN SECURITIES CLEARING CORPORATION
Change of Name. Japan Securities Clearing Corporation (JSCC) announced on 30 August 2002 that it wouldchange its corporate name to Japan Securities Settlement & Custody, Inc. effective October 1, 2002. Thischange was resolved during JSCC’s 64th Annual Meeting of Shareholders in June of this year.
The name Japan Securities Clearing Corporation, a brand well known within Japan and abroad, is nowtransferred for use by the new unified clearing organization that was recently incorporated and is scheduled tobe operational in January 2003.
In 1953, JSCC was established as a wholly owned subsidiary of the Tokyo Stock Exchange and has sinceprovided custodial and settlement services both domestically and internationally. Since the start of custodialand settlement services by the Japan Securities Depository Centre Inc. (JASDEC Inc.) in October 1991, JSCC hasplayed a key role in Japan’s securities settlement field by offering depository services to JASDEC Inc. forJapanese securities including stocks and convertible bonds.
JSSC will continue to provide its valued customers with exceptionally high quality service while aiming tomaintain its status as a superior international provider of settlement and custodial services.
Contact: Global Depository Services Japan Securities Settlement & CustodyEmail: [email protected]: +81-3-3665-1463FAX: +81-3-3669-0348
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The uniqueness of free-style batikor batik “conteng” lies in the
cloth’s surface. Dyes are spread onthe motifs according to the maker’s
creative inclination.
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To own a Sarawak artifact is to own notjust a work of art but a piece of
Borneo’s mystery.
SECURITIES CLEARING AUTOMATED NETWORK SERVICES SDN BHD
Clearing, Settlement and Depository Conference 2002. Securities Clearing Automated Network Services(SCANS) and Malaysian Central Depository (MCD) jointly hosted the Clearing, Settlement and DepositoryConference 2002 on Monday, 2 September 2002. The theme for this year’s conference was “The Future ofSecurities Settlement - What Needs to be Done”.
The conference which was aimed at members of the local stockbroking community, local custodian banks andlocal market regulators, featured six (6) sessions with speakers from Securities Commission of Malaysia,Omgeo Pte Ltd, S.W.I.F.T., McKinsey & Co, Inc (Malaysia), The Northern Trust Company and JP Morgan ChaseBank.
The conference has provided tremendous value to local industry participants, and was also an excellentopportunity to better understand the issues and developments in the industry. Participants gained greatinsights on global developments on areas relating to clearing, settlement and depository to better enhancecompetitiveness, reduce risk and increase efficiency of the local market.
MALAYSIAN CENTRAL DEPOSITORY SDN BHD
Consolidated CDS Statement For Effective Portfolio Management. Malaysian Central Depository Sdn Bhd(MCD), the central depository of the Kuala Lumpur Stock Exchange (KLSE), launched a new facility known asthe Consolidated CDS Statement of Account (CSA), on Monday, 21 October 2002.
The CSA provides the option for investors with multiple CDS accounts to receive details of all securities trans-actions on a consolidated statement. Presently, investors with multiple active CDS accounts receive individualstatements of each account monthly. Investors with inactive accounts - where accounts have no transactionsfor 36 months consecutively - will only receive half-yearly statements.
The CSA is investor-friendly, providing investors with a choice in the manner in which they would like to receivetheir statements, either as individual account statements or in a consolidated statement. Through the CSA,investors with multiple CDS accounts will be able to manage and reconcile their portfolio of securities heldthrough various CDS accounts more effectively.
The CSA will be issued as monthly and half-yearly statements. The CSA monthly statement will detailtransactions in all active accounts within the month and it will also state new accounts, inactive accounts andactive accounts with no transactions for the month. The CSA half-yearly statement will contain details of allstocks listed in the multiple accounts, including securities in inactive accounts.
THOMAS MURRAY
Update on Asset Servicing. Following the successful release of the Depository Service risk reports last year,Thomas Murray was encouraged by both users and support banks to extend the assessments to cover AssetServicing as an additional risk.
We have subsequently developed a questionnaire for assessing this risk and tested it with five depositoriesbefore finalising the criteria and data required to support it. The questionnaire has been incorporated onto ourweb site www.marketsselect.com and we have been inviting depositories to complete the three relevantsections to enable us to prepare a draft asset servicing risk assessment. The three sections are:
• Corporate Actions• Corporate Governance• Statistics and Other Services
Many Asia Pacific depositories are currently updating the three sections for their depository. At the same timedepositories should update any of the information relating to their activities in the other sections of the data-base. In particular where they have updated financial information or statistics on settlement and custody orwhere any changes in activities have occurred that may impact their risk profile. Once the data has beenprovided the Depository Reports will be updated and, in tandem with the support banks, will be resubmitted toyou for comment, with the objective of completing the reports before the end of this year.
Update on Custody and Settlement Infrastructure Risk Rankings (CSIRR). Thomas Murray has recentlyassessed and ranked 88 markets against 23 criteria which are combined under 4 risk headings;
• Sovereign risk• Clearing and settlement risk• Safekeeping risk• Asset servicing risk
A copy of CSIRR methodology is available on our website www.marketsselect.com. We would emphasise that therankings take account of the whole market infrastructure in terms of custody and settlement procedures. Whilethey include CSD practices, they are not limited to these, and hence are not ratings of CSDs.
In terms of regional groupings, perhaps not surprisingly, the European group scored highest with all 17markets scoring above the global average of 52.24. The Asia Pacific group has provided a wide disparity ofscores from 15.5 to 81.9 with Australia being top of the group and indeed taking the top spot globally.
One of the notable features within the Asia Pacific group is the significant improvements that have been madein settlement infrastructure; which have included shortening settlement cycles (India and Indonesia),dematerialization (India, Indonesia, Japan), improvements to securities lending and borrowing schemes(Singapore, Korea) and market consolidation and system improvements (Australia, Japan and China). Theimprovements, where significant are reflected in improved risk scores. A summary of the scores and rankingsfor the region is given in the following table.
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The traditional craft of woodcarvingexpresses the expertise of carvers in
the form of reliefs and cut-outcarvings.
Custody & Settlement Infrastructure Risk Rankings
Asia Pacific
Global Ranking Asia Pacific Overall Score(88 countries) Ranking Country (global average = 52.24)
1 1 Australia 81.908 2 Singapore 78.9813 3 New Zealand 76.9019 4 Hong Kong 73.4529 5 Japan 61.7032 6 South Korea 60.4833 7 China 59.6440 8 Philippines 53.1944 9 Malaysia 51.9847 10 Taiwan 50.1061 11 Thailand 42.5564 12 Indonesia 40.2266 13 India 38.7767 14 Sri Lanka 38.2570 15 Pakistan 35.1577 16 Vietnam 30.4087 17 Bangladesh 15.50
Thomas Murray publishes regional updates on the market ratings in a number of publications including TheBanker and Financial Times (Fund Management supplement). The regional results will be updated andreported at ACG6 in November.
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