singapore exchange 27 - 28 june 2006 the 8 th acg cross training seminar merits and demerits of...
TRANSCRIPT
Singapore Exchange
27 - 28 June 2006
The 8th ACG Cross Training SeminarMerits and Demerits of Direct and Indirect Accounts
OVERVIEW
CDP Overview
Services at CDP
Merits/Demerits of Direct Accounts
Merits/Demerits of Indirect Accounts
Q&A
1. Clearing House for Securities Market• Clears & settles securities transactions and
effects book-entry transfer of these securities
2. Central Depository• Acts as central depository for securities listed &
quoted on the SGX-ST and unlisted debt
securities• Entitlements distribution and corporate actions
CDP OVERVIEW
- ROLES AND FUNCTIONS
CDP OVERVIEW
- ACCOUNT STRUCTURE
CDPCDP
Direct Securities Accounts
Direct Securities Accounts
DA Sub-AccountsDA Sub-Accounts
IndividualAccountsIndividualAccounts
CorporateAccountsCorporateAccounts
Sub-A/c 1Sub-A/c 2Sub-A/c 3
CDP OVERVIEW
- ACCOUNTS OPENED AS AT 31 MAY 2006
1.28 million securities accounts
DA Sub-Accounts 5%
Individual Accounts(Individual, Joint, Corporate) 95%
1. What is a Direct Securities Account?• It is an account that investors maintain
with CDP directly to hold securities bought
from the Singapore Securities market. • Each account holder can only open 1
Direct Securities Account, which will track
the entire shareholdings portfolio.
CDP OVERVIEW
- ACCOUNT STRUCTURE
2. What is a DA Sub-Account?• It is an account that an investor maintains
directly with the Depository Agent (DA). • DA are approved participants who own,
manage or control a portfolio of securities in the course of their business, both for their own account and the account of clients.
• To facilitate the conduct of such business, they have requested CDP to allow them to maintain sub-accounts.
• DA can be custodian banks, securities brokerage houses, finance company nominee companies.
CDP OVERVIEW
- ACCOUNT STRUCTURE
CDP Direct Account
TM1 Trading A/C TM2 Trading A/C TM3 Trading A/C
1. Many TM Trading Accounts linked to 1 CDP
Direct Securities Account
2. Linkage authorisation = standing
instruction from account holder to CDP
CDP OVERVIEW
- RETAIL CLIENT SECURITIES SETTLEMENT
Investor Trading Member Clearing Member
CDP
Trade instruction
Trade detail & settlement instruction
Settlement instructionTrading Member
Participants who choose to offer specialist equities execution-only services. Each Trading Member must be qualified by a member of CDP at all times.Clearing MemberParticipants who have clearing rights and their role is to clear trades as third party clearers for Trading Members and for themselves if they also have trading rights. Currently, all Trading member are also Clearing Member, except for one.
CDP OVERVIEW
- TRADE FLOW
1. ‘Free’ balance• Securities that are fully paid
2. ‘Available’ balance• Securities not paid for• Cannot be traded• Earmarked for transfer or settlement
CDP OVERVIEW
- SECURITIES ACCOUNT BALANCES
3. Account Statements
1. Opening of Securities Accounts
2. Transfer of securities
3. Deposit of securities
4. Withdrawal of securities
5. Value Added Services:
Direct Crediting Services
Internet Services
CDP Automated Phone Services
SBL Services
SERVICES AT CDP
1. SGD dividends are credited on payment date,
directly into depositors’ bank accounts
2. No need to queue at bank
3. No worry about lost cheques
4. Major local and foreign participating banks
DIRECT CREDITING SERVICES (DCS)
1. On-line access to securities holdings, with current
portfolio value
2. Available 24 hours a day, 7 days a week
3. Access to transaction records for current and
previous months
4. Access to cash distributions for current and
previous months
CDP INTERNET SERVICES
1. Guided by automated voice instructions
2. Access to securities holdings and information on
corporate actions
3. Available 24 hours a day, 7 days a week
4. No traveling, no queuing & no hassle
CDP AUTOMATED PHONE SERVICES
SBL SERVICES
1. Earn a fee
2. No participation cost
3. Sell at anytime
4. Confidentiality will be maintained
To Account Holders
• Retain legal title over securities assets
• Financial security and confidentiality in safe haven
• Protection against unauthorised access to the account through the linkage
• Payment of dividends either by the issue of a cheque or through DCS with automated reporting to the tax authorities
• Automatic credit of security benefits directly to securities accounts
MERITS OF DIRECT ACCOUNTS
To CDP
• Huge database for promoting other value-added
services
• Direct relationship with customers
MERITS OF DIRECT ACCOUNTS
To brokers
• Brokers unable to view and earmark clients’
securities prior to sale.
To account holders
• Manage authorization to brokers
DEMERITS OF DIRECT ACCOUNTS
To Indirect account holders
• Provides them an alternative
• High level of security and confidentiality
• Access to a broad range of global investing
MERITS OF INDIRECT ACCOUNTS
To Indirect account holders
• Longer turnaround for cash distribution
• Shorter cutoff time for other corporate actions
• Higher cost
To CDP
• Unable to identify customers
DEMERITS OF INDIRECT ACCOUNTS