Author: Raja Ali

CDC organizes 14th WFC Conference in Hong Kong

CDC has strived to build quality international collaborations and get Pakistan Capital Market recognized in international arena. These collaborations have created layers of opportunities for our Capital and Financial Markets globally and has made CDC a globally recognized entity in the international Securities’ Industry.

The World Forum of Central Securities Depositories (WFC) is one of the prestigious global forums of securities industry on which CDC represents Pakistan. WFC is a global body of depositories and clearing houses, representing all the five regions, namely Asia, Europe, Middle East & Africa, Americas and CIS states.

CDC was one of the organizers of the WFC 2017 Conference held in Hong Kong from November 14-17, 2017. The WFC conference is a global biennial event that offers an information sharing and networking platform for leaders of central securities depositories and clearing houses, regulators and custodians including international banks from across the globe.

CDC was an organizer of the conference along with CSDs of China, India and Hong Kong. CDC was also responsible for agenda setting of the conference. More than 250 delegates from 58 countries and region participated in the event and appreciated the efforts of CDC Pakistan in making this conference a true success.

Mr. Aftab Ahmad Diwan, CEO-CDC, addressed the conference as a co-host of the event and appreciated the efforts of the association members for choosing pertinent discussion topics to make the most of the opportunity.

Mr. Shariq Naseem, Head of Product Development and Marketing – CDC, had chaired the Agenda Steering Committee of the Conference, which had representatives from all the five regional CSD associations. The committee was responsible for drafting and finalizing the agenda for the Conference, keeping in view the latest happenings of the industry and extending invitations to relevant speakers.

CEO-CDC selected Vice Chairman of ACG

Mr. Aftab Ahmad Diwan, CEO – CDC, was selected Vice Chairman of Executive Committee of Asia Pacific Central Securities Depository Group (ACG).This honor came to Pakistan in the 14th World Forum of CSDs (WFC 2017) Conference recently held in Hong Kong.

Asia Pacific Central Securities Depository Group (ACG) is a representative forum of all the depositories and clearing houses of the Asia-Pacific region. The group consist of 34 CSDs from 23 countries. The Executive Committee of ACG comprises of 8 elite depositories of the region representing countries including China, Japan, South Korea, India and Pakistan.

ACG is also one of the five members of World Forum of Central Securities Depositories (WFC), which is the global body of depositories and clearing houses, representing all the five regions, namely Asia, Europe, Middle East & Africa, Americas and CIS states.

As Vice Chairman of ACG Executive Committee, Mr. Diwan will now also represent the Asian region on WFC Board. It is an honor for Pakistan, as only two depositories from Asian region are present on the World Forum, which are CDC Pakistan and KSD Korea whose CEO, Mr. Lee Byungrhae is the Chairman of ACG Executive Committee.

CDC awarded IPO Market Innovation Award – 2016/2017

CDC has always been prompt to adopt new approaches and mechanisms for growth and development of Pakistan Capital Market. To achieve a similar purpose, CDC had launched its Centralized eIPO System (CES) in the beginning of 2017, to bring greater efficiency in the IPO application process and ease for the Capital Market investors. In recognition of its effort to develop and implement an electronic IPO system, CDC was awarded the IPO Market Innovation Award-2016/2017 at SAFE PSX Pakistan IPO SUMMIT 2017, held in Lahore in October 2017.

Through CES, applications for subscription of shares offered to general public can be made electronically and payments can be made by Internet/Mobile banking, ATMs etc., avoiding the hassle of physical submission of IPO application and visiting the bank.

CDC has introduced this system with an aim to help increase the outreach of IPOs, promote the culture of keeping securities in book-entry form and make the IPO process more user-friendly and efficient.

Investors can register themselves on eIPO portal ( free of cost and get alerts of upcoming IPOs through SMS and e-mail. The portal is available 24/7 for registration.

Understanding the REIT Business

What is REIT?

REIT is a mutual fund that focuses on investment in properties and real estate and derives income from such investments for its unit holders who are individuals as well as corporates/ institutions. REIT Scheme is a listed closed end scheme registered with SECP under REIT Regulations 2015. REITs in Pakistan have a trust structure. The trust structure consists of trustees, the REIT Management Company (RMC) and unit holders.

The trust is established by the RMC and the trustee under Trust Act. A REIT Management Company identifies a project and raises public money through an Initial public offering (IPO).

Types of REITs:

Developmental REIT Scheme:
a REIT Scheme established for investments in Real Estate with the objective of development of such Real Estate for industrial, commercial or residential purposes, through construction or refurbishment, and its subsequent sale.

Rental REIT Scheme: a REIT Scheme established for the object of making investment in industrial, commercial or residential Real Estate with the purpose of generating rental income from it. In a Rental REIT, a fully constructed property is first bought by the RMC and then rented out.

Hybrid REIT Scheme: a REIT Scheme which has both Developmental component as well as a Rental component.

CDC’s Role in a REIT:

Like Mutual Funds, CDC also plays the role of a Trustee in a REIT. As a Trustee, CDC undertakes the custody of all the assets of the Scheme including property along with its legal title, investments and its ancillary income on behalf of the unit holder. CDC also ensures that the assets as well as the income is being utilized by REIT Management Company (RMC) as per the requirements stipulated in Regulations, Trust Deed and Business Plan.

Among various other operational responsibilities, all the instructions of RMC including investment settlements, rent collections, dividend as well as expense payments are executed by Trustee in accordance with the provision of applicable Law. As a Trustee, CDC is under strict obligation to exercise due diligence in its role in order to protect the interest of the unit holder.

Apart from this, Trustee is also required to issue reports on quarterly as well as annual basis to the unit holder to indicate the level of compliance and the extent of violations (if any) by RMC in comparison to the Business Plan.

CDC offers Sub Account opening facility through Banks across Pakistan

CDC has played a vital role in providing opportunities of easy access to Capital Market for the common investor. Continuing with this resolve to increase Capital Market outreach and convenience for retail investors, CDC initiated the drive to encourage banks to offer Sub Account Opening facility through their branches. As a result, CDC signed a Depository Participant agreement with United Bank Limited (UBL) in March 2017 through which UBL customers can open accounts with CDC and conduct transactions through designated UBL branches.

Now four Banks have joined this initiative including Summit Bank, BankIslami Pakistan and Bank Al-Habib. These banks are providing Sub Account Opening service to their customers all across Pakistan including major cities of Karachi, Lahore and Islamabad. Details of bank branches offering this service are available on CDC’s website

IBAN now a mandatory requirement for maintaining account with CDC

CDC’s core purpose is to automate Capital Market processes and make mechanisms smooth and efficient. In pursuance of this aim, the Company had been working towards introducing electronic disbursement of dividends mechanism by utilizing modern banking channels.

Recently, with the newly promulgated Companies Act, 2017, our efforts have been endorsed by the regulatory authorities. As per Section 242 of the Act, it has now become mandatory for all listed companies to pay dividends to their shareholders electronically. For companies to comply with this requirement it has become necessary that International Bank Account Number (IBAN) of investing public are available to facilitate payment of cash dividends in electronic mode.

As a result, CDC has made it mandatory for Capital Market investors to provide IBAN as part of the registration details for opening and maintaining Sub Account in the Central Depository System (CDS). This amendment in CDC Regulations has also been approved by Securities and Exchange Commission of Pakistan (SECP).
This regulation will help facilitate electronic payment of cash dividends directly into the bank account of shareholders, making the process in line with international practices.

The necessary tools for insertion of IBAN have also been made available in the Central Depository System (CDS) from September 14, 2017 (onwards) for the convenience of the clients. Furthermore, subscription of SMS alerts for all Resident Pakistani Individuals and email alerts for Foreign/Non-Resident Individuals and Corporate entities has also been made mandatory to maintain transparency by providing timely update of transactions.

Awareness sessions were also organized for all CDS Participants and Global Custodians to ensure smooth implementation of this regulation and ensure transparency.