CDC implements Automation of Securities Transfer Mechanism

Central Depository Company (CDC) in collaboration with NCCPL recently implemented the Automation of Securities Transfer Mechanism in the Central Depository System. This project was initiated in 2008 as a joint effort by CDC and NCCPL, with the objective of introducing efficiency in the settlement process relating to securities transactions and to ensure movement of securities from / to the respective Sub-Accounts.
CDC played the lead role in the project and co-ordinate the efforts of all the participants. In line with the view to promote Straight-through Processing in the capital market operations, this mechanism has been developed to automate the Free Delivery Transactions to a great extent thereby minimising the use of the Main Account. The new mechanism allows securities to be automatically transferred from the seller's CDS account to the buyer's CDS account without being routed through the Main Account. After Automation, manual free deliveries and the use of the Participants' Main Account are restricted only in exceptional circumstances not covered by the automated settlement process. As a result of this project, the settlement of the vast majority of securities transactions executed on the three stock exchanges in the country are now being performed directly from the respective accounts of investors, without the need for any manual input of transaction, thus ensuring complete transparency and straight-through-processing in the market.
The successful processing of the first Balance Order took place under the new automated securities transfer regime on December 27, 2010, marking significant improvement in the settlement of securities transactions. The mechanism has been running smoothly since then. The problem-free implementation of an extremely complex and demanding project is a testament to the high level of professional skills and the particular attention to detail displayed by the implementation team which ensured that the system design was exactly compatible with business needs. The closely synchronised changes to the systems of both CDC and NCCPL were achieved with the commitment and motivation of both CDC and NCCPL.
In addition to the system changes, relevant changes were also made in the regulations of CDC and NCCPL. CDC Regulations were also published in the official Gazette of Pakistan.-PR