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The 8 th 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

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The 8th ACG Cross Training Seminar

Merits and Demerits of Direct and Indirect Accounts

27 - 28 June 2006

Singapore Exchange


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OVERVIEW

  • CDP Overview

  • Services at CDP

  • Merits/Demerits of Direct Accounts

  • Merits/Demerits of Indirect Accounts

  • Q&A


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CDP OVERVIEW

- ROLES AND FUNCTIONS

  • 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


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    CDP

    Direct Securities Accounts

    DA Sub-Accounts

    Sub-A/c 1

    Individual

    Accounts

    Corporate

    Accounts

    Sub-A/c 2

    Sub-A/c 3

    CDP OVERVIEW

    - ACCOUNT STRUCTURE


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    CDP OVERVIEW

    - ACCOUNTS OPENED AS AT 31 MAY 2006

    1.28 million securities accounts

    DA Sub-Accounts

    5%

    Individual Accounts

    (Individual, Joint, Corporate)

    95%


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    CDP OVERVIEW

    - ACCOUNT STRUCTURE

    • 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.


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    CDP OVERVIEW

    - ACCOUNT STRUCTURE

    • 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.


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    CDP OVERVIEW

    - RETAIL CLIENT SECURITIES SETTLEMENT

    • Many TM Trading Accounts linked to 1 CDP Direct Securities Account

    • Linkage authorisation = standing instruction from account holder to CDP


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    Trade detail & settlement instruction

    Trade instruction

    Investor

    Trading Member

    Clearing Member

    Settlement instruction

    CDP

    CDP OVERVIEW

    - TRADE FLOW

    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.


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    CDP OVERVIEW

    - SECURITIES ACCOUNT BALANCES

    • ‘Free’ balance

      • Securities that are fully paid

  • ‘Available’ balance

    • Securities not paid for

    • Cannot be traded

    • Earmarked for transfer or settlement

    • Account Statements


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    SERVICES AT CDP

    • Opening of Securities Accounts

    • Transfer of securities

    • Deposit of securities

    • Withdrawal of securities

    • Value Added Services:

    • Direct Crediting Services

    • Internet Services

    •  CDP Automated Phone Services

    •  SBL Services


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    DIRECT CREDITING SERVICES (DCS)

    • SGD dividends are credited on payment date, directly into depositors’ bank accounts

    • No need to queue at bank

    • No worry about lost cheques

    • Major local and foreign participating banks


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    CDP INTERNET SERVICES

    • On-line access to securities holdings, with current portfolio value

    • Available 24 hours a day, 7 days a week

    • Access to transaction records for current and previous months

    • Access to cash distributions for current and previous months


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    CDP AUTOMATED PHONE SERVICES

    • Guided by automated voice instructions

    • Access to securities holdings and information on corporate actions

    • Available 24 hours a day, 7 days a week

    • No traveling, no queuing & no hassle


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    SBL SERVICES

    • Earn a fee

    • No participation cost

    • Sell at anytime

    • Confidentiality will be maintained


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    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


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    MERITS OF DIRECT ACCOUNTS

    • To CDP

    • Huge database for promoting other value-added services

    • Direct relationship with customers


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    DEMERITS OF DIRECT ACCOUNTS

    • To brokers

    • Brokers unable to view and earmark clients’ securities prior to sale.

    • To account holders

    • Manage authorization to brokers


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    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


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    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