Transcript Title Typography

The 8th ACG Cross Training Seminar
Merits and Demerits of Direct and Indirect Accounts
27 - 28 June 2006
Singapore Exchange
OVERVIEW
CDP Overview
Services at CDP
Merits/Demerits of Direct Accounts
Merits/Demerits of Indirect Accounts
Q&A
CDP OVERVIEW
- ROLES AND FUNCTIONS
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
- ACCOUNT STRUCTURE
CDP
Direct Securities
Accounts
DA Sub-Accounts
Sub-A/c 1
Sub-A/c 2
Individual
Accounts
Corporate
Accounts
Sub-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%
CDP OVERVIEW
- ACCOUNT STRUCTURE
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
- RETAIL CLIENT SECURITIES SETTLEMENT
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
- TRADE FLOW
Trade
instruction
Investor
Trade detail &
settlement
instruction
Trading Member
Clearing Member
Trading 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.
Settlement
instruction
CDP
Clearing Member
Participants 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
- SECURITIES ACCOUNT BALANCES
1. ‘Free’ balance
• Securities that are fully paid
2. ‘Available’ balance
• Securities not paid for
• Cannot be traded
• Earmarked for transfer or settlement
3. Account Statements
SERVICES AT CDP
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
DIRECT CREDITING SERVICES (DCS)
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
CDP INTERNET SERVICES
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 AUTOMATED PHONE 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
SBL SERVICES
1. Earn a fee
2. No participation cost
3. Sell at anytime
4. Confidentiality will be maintained
MERITS OF DIRECT ACCOUNTS
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
DEMERITS OF DIRECT ACCOUNTS
To brokers
•
Brokers unable to view and earmark clients’
securities prior to sale.
To account holders
•
Manage authorization to brokers
MERITS OF INDIRECT ACCOUNTS
To Indirect account holders
•
Provides them an alternative
•
High level of security and confidentiality
•
Access to a broad range of global investing
DEMERITS 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