::::::::: Introduction:::::::::

Central Depository Company of Pakistan Limited (CDC) was incorporated in 1993 and subsequently became operational in 1997 to manage and operate the Central Depository System (CDS). CDS is an electronic book entry system to record and transfer securities. Electronic book entry means that the securities do not physically change hands and the transfer from one client account to another takes place electronically. An IBM led consortium along with the management of the company implemented CDS in Pakistan.

The aim of CDC is to operate as a central securities depository on behalf of the financial services industry so as to contribute to the country's ability to support an effective capital market system which will attract institutional and retail level investors from Pakistan and abroad.

::::::::: Mission Statement:::::::::

CDC is committed to provide secured and dependable services to the capital and financial markets in an efficient and cost-effective manner comparable to best international practices. The Company’s aim is to be the centre of excellence by continuously employing the state-of-the-art technology available and best talent in the country while maintaining good corporate governance in its working. It is committed to provide its employees an environment of professional and personal growth.

::::::::: V i s i o n:::::::::

To be a leading national institution providing quality services to capital and financial markets stimulating economic growth.

::::::::: History of CDS Project:::::::::

With exponential growth in the Pakistani Capital Market during the last decade resulting in manifold increase in trading volumes, the physical handling of paper certificates not only became laborious but also time consuming. The manual system was no longer feasible. It was in this perspective that CDC was incorporated to implement and operate the CDS. 

Experts of the renowned international firm Price Waterhouse conducted a study in 1993 to develop a conceptual framework for the depository. The study was sponsored by the United States Agency for International Development (USAID) and their report laid the foundation of depository design.

In November 1994, the Board of CDC awarded a turnkey contract to the IBM consortium for the implementation of the system in Pakistan. The IBM consortium proposed a comprehensive Master Implementation Plan (MIP) to the CDC board after a detailed analysis of the following:

• National requirements
• Company and Banking laws
• Regulations & Procedures
• Financial and organizational aspects of the project

In April 1995, MIP was approved by the CDC board.

Thereafter, user groups performed, training sessions were conducted to introduce the system to the clients and the necessary infrastructure was developed. The infrastructural development included testing and development of software, hiring and training of personnel and establishment of CDC offices. The CDC offices at Lahore and Islamabad were connected to the head office through VSAT link leading to the development of a geographically neutral depository. 

::::::::: Problems Faced by the Capital Markets before CDS:::::::::

Since the last decade, the capital markets of Pakistan have witnessed a substantial growth leading to a manifold increase in the trading volume. The custody and safe keeping of physical certificates required maintenance of huge vaults by the individuals and institutions and the physical settlement of certificates was no longer feasible. Moreover, the manual system was also plagued by lengthy delays, risks of damage, forgeries and considerable time and capital investment.

Following is a list of the major problems faced by the Members of the Stock Exchange, Investors, Issuers of Securities and others:

a)  Increased volume of book keeping and paper work.
b)  Problems in settlement due to increased volume.
c)  Maintenance of huge vaults for safe keeping of certificates.
d)  Long and cumbersome share transfer procedure taking up to 45 days. 
e)  Payment of stamp duty on share transfers which ranged from 0.1% to 1.5% of the face value.
f)  In case of new issues the issuers would take more than two months for the dispatch of
    certificates 
    to the successful applicants and for the subsequent preparation and verification of transfer deeds. 
g)  Risks of damaged, lost, forged and duplicate certificates.
h)  Lengthy and tedious procedure involved in pledging of physical securities.
i)  Capital and time investment required for issue and dispatch of share certificates, cash dividend, 
    bonus and right issues.
j)  Issuance of duplicate certificates.
k)  Activities carried out for share transfer during book closure:
• Signature verification
• Checking correct value of transfer stamps
• Verifying genuineness of certificates
• Signature of Director for confirmation of transfer

The answer to all these questions was to set up an electronic book entry system in Pakistan. This led to the establishment of Central Depository Company of Pakistan Limited developed to manage and operate the Central Depository System (CDS).

::::::::: Benefits of Electronic Settlement through CDS:::::::::

Following are some of the benefits of electronic settlement of securities through CDS:

a) Reduced workload due to paperless settlement.
b) Reduced manpower and requirements.
c) Instantaneous transfer of ownership. 
d) No stamp duty on transfers in CDS.
e) No risk of damaged, lost, forged or duplicate certificates. 
f) No impact in case of sudden increase of settlement volumes. 
g) Instant credit of bonus, rights and new issues. 
h) Substantial reduction of paperwork during book closure.
i) Convenient pledging of securities.
j) Substantial reduction in time & capital investments.

::::::::: Sponsors:::::::::

::::::::: Organizational Structure :::::::::

The operations of the company are carried out by a team of high caliber professionals from a wide spectrum of relevant disciplines possessing graduate and postgraduate qualifications from distinguished local and international institutions. Based on operational needs, the company has segregated itself in the following departments: Click here to view Management Profiles

::::::::: Security Measures:::::::::

The Central Depository Company of Pakistan Limited takes security of Central Depository System extremely seriously and is committed to provide a complete and secure system to its clients so as to ensure smoothe and risk free settlement of security transaction. However, it is important to understand that most systems do not cater for all security features from day one and such features evolve with the system itself. Nevertheless, we are constantly looking into the possibilities to further enhance the security of the system and are committed to make CDS an exemplary system in this regard. Following are some of the features implemented so far:

1. CDS IDs and Passwords: All CDS elements are allocated unique IDs and Passwords through which to enter the system.

2. Dial-in IDs and Passwords: This feature is an additional layer of security for those clients who are connected to us through telephone lines.

3. Terminal Authentication: CDS elements can only get connected to us through their designated terminals.

4. Two factor Authentication - RSA & VPN

Contingency Site

CDC provides the backbone for smooth and efficient settlement operations of the Pakistani capital market. Almost all of the total settlement of the stock exchanges is now done through the CDS. By recognizing the computer facility being the core resource for the operation of CDS, we have critically evaluated potential risks of CDS becoming unavailable to the users and accordingly developed a contingency site office in Karachi. The site is installed with redundant hardware; software and requisite network to provide cost effective connectivity and support to all CDS users. A reliable data communication link is deployed to connect the remote site with the primary site and transmit the latest CDS status to the remote site at the shortest possible intervals. This arrangement is an additional to daily tape back ups made to keep record of the CDS status and will ensure convenience, safety, reliability and efficiency.

Insurance Coverage

In order to protect itself from any loss arising due to claim lodged by any CDS element, the Central Depository Company of Pakistan Limited has obtained insurance coverage against the following risks:

1. Employees' infidelity
2. Computer Crime
3. Professional Liability

Insurance coverage has been acquired from a consortium of EFU General Insurance Company Limited, New Jubilee Insurance Company Limited and PICIC Insurance Limited for Rs. 1 billion.

Since commencement of business the sum insured was Rs. 50 million, however it was increased to Rs. 300 million on December 30, 2005. The coverage was increased again on November 01, 2006 and now stands at Rs. 1 billion.

::::::::: Services Offered:::::::::

Following is a brief description of the services provided by us:

Customer Support Help Desk

It is essential to understand the importance of effective and timely customer support in the success of a service providing organization. We believe that effective and timely customer support is the right of our clients and the key to our success.

Since inception, CDC has been providing timely and effective customer support to CDS elements through dedicated Customer Support Staff regarding the use of CDS software and the workings of Central Depository Company of Pakistan Limited. The system works as an interface between CDC and its clients and is also being used as a tool to educate the clients.

Highly trained professionals with complete and lucid knowledge of the CDS can be contacted in Karachi, Lahore and Islamabad through toll free 0800-CDCPL (23275) during operating hours. It is a completely automated system in which queries are entered in Complaint Management System by our staff and are either satisfied on receipt or referred to the concerned department electronically for resolution. This electronic transfer of queries reduces considerable paper work and processing time. To ensure early response to every problem, any query pending over its allocated time is reported to the senior management.

Just like Central Depository System, Customer Support Help Desk is also geographically neutral. This ensures consistent standard of services throughout the country.

Account Statement Verification

An Account Holder / Participant can confirm the balance of the accounts maintained by them from Customer Support Services. In this regard, the Account Holders / Participants are required to provide a duly signed Account Balance Statement obtained from their terminal. Upon receipt of the statement, the same is generated from CDC's terminal and handed over to the requestor after due verification.

Such requests are also entertained for sub account holders. However, they are required to provide a request letter and present their original NIC to obtain the report. This measure has increased the confidence level of investors substantially.

Global Terminal Facility

All CDS elements are required to access CDS through their authenticated terminals only. For the benefit of its clients, CDC has provided computer terminals at its premises to be operated by clients, (all CDS elements) in case of any technical problem at their end. With this facility, clients can directly log on to their accounts from CDC premises and complete their transactions.

Clients are required to bring a request letter duly signed by the authorized signatory (ies) of the account to avail this facility.

CDC E-mail Facility

CDC E-mail Facility provides CDC the capability to send encrypted e-mails with digital signatures to its Elements in Karachi, Lahore and Islamabad. With this facility in place, CDC can correspond to its clients in an effective and cost efficient manner.

Users can open the received e-mail by clicking 'Outlook Express' option from the 'Programs' sub menu of the MS-Windows 'Start' menu. The same operation can be executed by clicking MS-Outlook Express icon in the task bar. Once the Outlook Express main screen appears, user would be able to Receive, Read and Delete e-mails.

Deployment of this E-mail service reflects CDC's efforts toward its customer centric focus and providing quality service and satisfaction to its clients.

Training

In order to familiarize our clients with the concept & workings of the Central Depository System, CDC provides training to its clients on as needed basis. In a full-day training session, clients are walked through the Central Depository System enabling them to have a comprehensive understanding of the system. CDC does not charge clients for training and the clients can request as many session as they desire.

In addition to the above, various other services like password reset, change in registration details of Account holders / Participants, change in user option, change of authorized signatories and installation / reinstallation / additional connection etc. are provided to the clients.

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