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Singapore Exchange 27 - 28 June 2006 The 8 th ACG Cross Training Seminar Merits and Demerits of Direct and Indirect Accounts.

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Presentation on theme: "Singapore Exchange 27 - 28 June 2006 The 8 th ACG Cross Training Seminar Merits and Demerits of Direct and Indirect Accounts."— Presentation transcript:

1 Singapore Exchange 27 - 28 June 2006 The 8 th ACG Cross Training Seminar Merits and Demerits of Direct and Indirect Accounts

2 OVERVIEW CDP Overview Services at CDP Merits/Demerits of Direct Accounts Merits/Demerits of Indirect Accounts Q&A

3  Clearing House for Securities Market Clears & settles securities transactions and effects book-entry transfer of these securities  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

4 CDP OVERVIEW - ACCOUNT STRUCTURE CDP Direct Securities Accounts DA Sub-Accounts Individual Accounts Individual Accounts Corporate Accounts Corporate Accounts Sub-A/c 1 Sub-A/c 2 Sub-A/c 3

5 CDP OVERVIEW - ACCOUNTS OPENED AS AT 31 MAY 2006 1.28 million securities accounts DA Sub-Accounts 5% Individual Accounts (Individual, Joint, Corporate) 95%

6  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

7  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

8 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

9 InvestorTrading MemberClearing Member CDP Trade instruction Trade detail & settlement instruction Settlement instruction 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. 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 - TRADE FLOW

10  ‘Free’ balance Securities that are fully paid  ‘Available’ balance Securities not paid for Cannot be traded Earmarked for transfer or settlement CDP OVERVIEW - SECURITIES ACCOUNT BALANCES 3.Account Statements

11 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

12 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)

13 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

14 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

15 SBL SERVICES 1.Earn a fee 2.No participation cost 3.Sell at anytime 4.Confidentiality will be maintained

16 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

17 To CDP Huge database for promoting other value-added services Direct relationship with customers MERITS OF DIRECT ACCOUNTS

18 To brokers Brokers unable to view and earmark clients’ securities prior to sale. To account holders Manage authorization to brokers DEMERITS OF DIRECT ACCOUNTS

19 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

20 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



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