The capital market regulator has stated that the permission was granted as per the CDS Service Regulations 2011 as the company fulfilled all the requirements of necessary infrastructure to run the service.[break]
However, share analysts said immediate implementation of CDS service is not possible as the company failed to make necessary preparation in appointing Depository Participants (DPs) to work as agents of CDS Company to undertake transactions across the country.
Banks, financial institutions, stock brokers and merchant banks having more than 10 million rupees net worth can act as the DPs for CDS Company.
“Given the sloppy preparation of CDS Company in implementing the CDS system, it is going to prove itself a ´white elephant´ as no company or stock broker has shown interest to work as DPs,” said a source at Nepse.
Nepse is the sole promoter of the CDS Company with total paid-up capital of Rs 300 million.
Though Nepse commenced online transactions of securities a couple of years ago, settlement and clearing have been conducted manually in the absence of fully automated technology.
Under the system, each investor will be assigned an identification number so that no one can misuse other´s identity during share transactions. After the introduction of CDS service, officials expect to expand the scope of country´s security market by matching its standard with SAARC level.
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